Answer to Question 21 The investment demand curve portrays an inverse ( negative) relationship between: A. the level of investment. C)an inverse relationship between aggregate consumption and accumulated .. The investment demand curve portrays an inverse (negative) relationship. The relationship between consumption and disposable income is such that . The invest ment demand curve portrays an inverse (negative) relationship.
C decrease in income tax rates. D increase in saving. A shift of the consumption schedule from C1 to C2 might be caused by a: C increase in income tax rates. A movement from a to b along C1 might be caused by a: D increase in real GDP.
- Interest and Topic
- Aggregate Demand (AD) Curve
A shift of the consumption schedule from C2 to C1 might be caused by a: A increase in real GDP. B reverse wealth effect, caused by a decrease in stock market prices.
D decrease in saving. An upward shift of the saving schedule suggests: Which of the following will not tend to shift the consumption schedule upward?
The investment demand curve portrays an inverse (negative) relationship between:? | Yahoo Answers
A a currently small stock of durable goods in the possession of consumers B the expectation of a future decline in the consumer price index C a currently low level of household debt.
D the expectation of future shortages of essential consumer goods. If the consumption schedule shifts upward and the shift was not caused by a tax change, the saving schedule: A will not shift.Marginal Propensity to Consume and to Save
B may shift either upward or downward. D will also shift upward.
Which of the following will not cause the consumption schedule to shift? A a sharp increase in the amount of wealth held by households B a change in consumer incomes C the expectation of a recession D a growing expectation that consumer durables will be in short supply Answer: An increase in personal taxes will shift: A both the consumption and saving schedules downward.
The investment demand curve portrays an inverse (negative) relationship between:?
B both the consumption and saving schedules upward. C the consumption schedule upward and the saving schedule downward.
D the consumption schedule downward and the saving schedule upward. If for some reason households become increasingly thrifty, we could show this by: Three reasons cause the aggregate demand curve to be downward sloping. The first is the wealth effect. The aggregate demand curve is drawn under the assumption that the government holds the supply of money constant.
One can think of the supply of money as representing the economy's wealth at any moment in time. As the price level rises, the wealth of the economy, as measured by the supply of money, declines in value because the purchasing power of money falls. As buyers become poorer, they reduce their purchases of all goods and services.
On the other hand, as the price level falls, the purchasing power of money rises. Buyers become wealthier and are able to purchase more goods and services than before.
A second reason is the interest rate effect. As the price level rises, households and firms require more money to handle their transactions.
Aggregate Demand (AD) Curve
However, the supply of money is fixed. The increased demand for a fixed supply of money causes the price of money, the interest rate, to rise. As the interest rate rises, spending that is sensitive to rate of interest will decline. Hence, the interest rate effect provides another reason for the inverse relationship between the price level and the demand for real GDP.
The third and final reason is the net exports effect. Changes in aggregate demand. Changes in aggregate demand are represented by shifts of the aggregate demand curve. An illustration of the two ways in which the aggregate demand curve can shift is provided in Figure.
A shift to the right of the aggregate demand curve. A shift to the left of the aggregate demand curve, from AD 1 to AD 3, means that at the same price levels the quantity demanded of real GDP has decreased.
Changes in aggregate demand are not caused by changes in the price level.