Macroeconomics
Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Chapter 10, Problem 3QQ
To determine

Indicators of recession.

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A) List and explain in detail, the components of Aggregate Demand and explain each of their determinants. List the four components and explain them and under each list and explain the determinants of each.
One explanation for the negative slope of the aggregate demand curve is the "wealth effect" (aka the "real‑balances" effect). What is this effect?     a. As inflation occurs, consumers buy fewer goods and services because the value of their accumulated wealth declines.   b. Interest rates increase when prices rise as consumers try to borrow larger amounts of money to maintain their consumption. The higher interest rate discourages spending.   c. As inflation occurs, the purchasing power of consumers increases as accumulated wealth increases in value.   d. For normal goods, people buy more of a product if their income increases.   According to the wealth effect, what happens as the price level falls?   a. Consumption spending decreases and investment spending increases. b. Consumption spending decreases. c. Consumption spending increases and investment spending decreases. d. Consumption and investment spending increase. e. Consumption and investment spending…
What is the effect of a rise in the money wage rate when the economy is at potential GDP? A rise in the money wage rate when the economy is at potential GDP A. does not change potential GDP but increases real GDP along the AS curve. B. decreases potential GDP because the full-employment quantity of labor decreases C. does not change aggregate supply but decreases production D. decreases aggregate supply because a rise in the money wage rate increases costs, so firms employ fewer workers Click to select your answer.
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