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Questions and Answers
What are the components that make up the aggregate demand?
What are the components that make up the aggregate demand?
- Producer spending, government subsidies, consumer savings, and net imports
- Corporate investments, household consumption, foreign investments, and trade deficit
- Consumer spending, investment, corporate and government expenditure, and net exports (correct)
- Government spending, international aid, household income, and trade surplus
What does aggregate demand (AD) represent in economics?
What does aggregate demand (AD) represent in economics?
- The demand for intermediate goods and services in an economy
- The total demand for final goods and services in an economy at a given time (correct)
- The demand for imports and exports in an economy
- The total supply of goods and services in an economy
How is the aggregate demand curve plotted?
How is the aggregate demand curve plotted?
- With price level on the horizontal axis and real output on the vertical axis
- With consumer spending on the horizontal axis and investment on the vertical axis
- With real output on the horizontal axis and the price level on the vertical axis (correct)
- With government expenditure on the horizontal axis and net exports on the vertical axis
What does the Pigou effect state in relation to aggregate demand?
What does the Pigou effect state in relation to aggregate demand?
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According to macroeconomic assumptions, how is the downward sloping aggregate demand curve derived?
According to macroeconomic assumptions, how is the downward sloping aggregate demand curve derived?
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