Using an AD-AS diagram, explain what happens if personal income taxes increase.

Q: Can you explain how expectations about future prices and incomes will affect consumption?

A: Consumption measures the total consumption spending by the households on different goods and…

Q: Graphically illustrate the long-run aggregate supply curve. Explain how you derive this curve with…

A: In the long run, the aggregate supply curve is assumed to be vertical that is it does not change…

Q: How was the aggregate supply curve different from the supply curve for single good like pizza?

A: Aggregate supply curve shows the response of the aggregate supply to the fluctuations in the price…

Q: What is the difference between a movement along the aggregate demand curve and a shift of the…

A: Aggregate demand is the complete demand for final goods and services at a particular time and price…

Q: Explain  the factors that cause the Aggregate Demand curve to be downward sloping left to right.

A: The meaning of downward sloping demand curve is that when the price falls the aggregate demand…

Q: In a situation of recession, what are the types of goods that will see their demand increase? Give…

A: Recession refers to a period of temporary economic fall during which trade and industrial activity…

Q: An increase in consumer confidence would cause the AD curve to:

A: The Law of demand refers to the inverse or negative relationship between the quantity demanded of a…

Q: Aggregate demand and aggregate supply.  Aggregate demand and aggregate supply can be influenced by…

A: AD or aggregate demand is the sum of all the demands of finished goods in an economy. It depicts the…

Q: What happens to the Aggregate Demand (AD) when there is an increase in Government purchases

A: Meaning of Fiscal Policy: The term fiscal policy refers to the situation under which the…

Q: Which of the following components of consumption spending typically sees the largest decline in…

A: A recession is a time of financial compression rather than development. During such periods, the…

Q: what are the four main components of aggregate demand? which is the largest? which is the smallest?

A: Aggregate demand alludes to the demand for the nation's (GDP) and the proportion of demand for…

Q: Describe the possible effects of falling prices on equilibrium income?

A: Equilibrium income is reached when the economy comes with an equal amount of production and market…

Q: What effect would an increase in aggregate supply have on price levels and GDP?

A: The aggregate supply curve is used to show the relationship between the quantity supplied of real…

Q: The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the…

A: Aggregate demand is downward sloping showing inverse relationship between price and output.

Q: What are variables that affect AD (also considered the Demand side of GDP)?

A: Aggregate Demand can be defined as total amount of goods and services that the consumers are able…

Q: if an inflationary gap exists, what will happen to business inventories?

A: The difference between what gross domestic product (GDP) would be at full employment and the actual…

Q: Use an aggregate demand and aggregate supply dia- gram to illustrate and explain how each of the…

A: Aggregate demand (AD) refers to the total of individual demand of all markets The AD curve is…

Q: A movement up a given aggregate demand curve is the result of

A: Demand is regarded as an economic principle which refers to a consumers desire to buy goods and…

Q: What effect would an increase in aggregate demand have on price level and GDP?

A: Answer: Aggregate demand: It refers to the total demand for final goods and services in an economy…

Q: Suppose an economy is hit by a recession and people’s income fall. a) Show graphically using AD-AS…

A: a. The impact of reduction in income can be illustrate as follows: In the figure, horizontal axis…

Q: What effect would an increase in aggregate demand have on price levels and GDP?

A: Gross domestic product refers to the total amount of all the goods, and services produced in an…

Q: factors that could cause AD to shift, and say weather they would shift AD to the right or to the…

A: Aggregate demand- It is the total amount of goods or services that consumers are willing to purchase…

Q: What are the major components of aggregate demand? How these components impact the Aggregate Demand?…

A: The total demand for finished products and services in an economy is referred to as aggregate…

Q: Identify factors that would cause consumption spending to increase. What effect would that have on…

A:

Q: If the price level increases, what happens to the consumption function? Why?

A: The following problem has been solved as follows:

Q: Is aggregate demand a specific dollar amount?. For example would it be correct to say aggregate…

A: Aggregate Demand -:                                      It refers to the total quantity of goods…

Q: What effects would  increase in aggregate supply have on price levels and GDP?

A: In economics, the aggregate supply level is a concept which measures the level of total output or…

Q: the definition and examples of aggregate demand?

A: Aggregate demand: Aggregate demand is up to a nation's gross domestic product (GDP) within the…

Q: What effects would  increase in aggregate demand have on price levels and GDP?

A: Aggregate demand is the total demand for final services and goods at a given period and price level.…

Q: How do Classical and Keynesian economists differ in their view of the aggregate supply curve?

A: Classical school of economics is based on free market. They believes that market forces works…

Q: What are 3 ways in which aggregate supply could decrease in an economy?

A: AGGREGATE SUPPLY Aggregate supply is cumulative of goods and services produced in an economy in a…

Q: the question is true or false: "An increase in business investment spending has the same effect on…

A: Aggregate demand is the total quantity of commodities that the consumers are willing to buy at…

Q: Describe the concept of aggregate demand and aggregate supply?

A: Aggregate demand is the measure of the overall quantity of demand for all finished goods and…

Q: e following graph shows the aggregate demand (AD) and aggregate supply (AS) curves for a…

A: At equilibrium point aggregate demand and aggregate supply are equal  at certain price level. And…

Q: If an inflationary gap exists, what will happen to business inventories?  How will producers…

A: The inflationary gap refers to a situation when the current level of real GDP is higher than the…

Q: What effect would an increase in aggregate demand have on price levels and GDP ?

A: Aggregate demand , which signifies the planned demand by economic agents like consumers, business…

Q: Why does the economy's aggregate demand curve have a negative slope?

A: Three reasons that show the Aggregate Demand curve is downward sloping (or have a negative slope):…

Q: Gas prices have risen 38% in the last year. For every 10% increase in oil and gas prices the…

A: In an economic market, prices and quantities of goods sold and bought are determined by the market…