a. Why the aggregate demand curve slopes downwardThe following graph shows the aggregate demand (AD)...

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a. Why the aggregate demand curve slopes downwardThe following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the aggregate price level Is 120, and the quantity of output demanded Is $500 billion. Moving up along the aggregate demand curve fmm point A to 6, the aggregate price level rises to 140, and the quantity of output demanded falls to $300 billion.You can assume that the economy's money supply remains fixed.AGGREGATE PRICE LEVEL XXXXXXXXXX — XXXXXXXXXX ------- -,1•• 11010090o XXXXXXXXXXSOO BOO XXXXXXXXXXREAL GOP (Burns of dollars!As the aggregate price level rises, the cost of borrowing money will , causing the quantity ofoutput demanded to . This phenomenon is known as theeffect.ANSWER OPTIONS:   	Decline, rise, Remain the same 
	
Document Preview: ANSWER OPTIONS:Decline, rise, Remain the sameANSWER OPTIONS:100 billion, 600 billion, 700 billion, 400 billionANSWER OPTIONS:plot the graphshift of, movement alongto the right, to the left, down, up50 billion, 200 billion, 100 billion, 150 billion2, 0.25, 0.5, 100, 50ANSWER OPTIONS:Plot the graph above as requestedANSWER OPTIONS:Plot the graph above as requestedANSWER OPTIONS:Multiple choice as noted aboveANSWER OPTIONS:decrease or increasedeclines or improvesANSWER OPTIONS:Plot the chart as indicated abovePositive demand, negative demand, negative suppy, positive supplyRises or declinesRises or declinesANSWER OPTIONS:Multiple choice as indicated aboveANSWER OPTIONS:Multiple choice as indicated above-44% or 40%a recessionary, a stagflationary, an inflationaryANSWER OPTIONS:Multiple choice as indicated above

David · Accepted Answer

ANSWER OPTIONS: 
1. Decline, rise, Remain the same 
2. Decline, rise, Remain the same 
3. Crowding out
ANSWER OPTIONS: 
4. 100 billion, 600 billion, 700 billion, 400 billion
ANSWER OPTIONS: 
 plot the graph 
Answer: when price level falls to 110, interest rates falls in the economy, causing planned 
investment level to increase. As a result planned aggregate spending line would shift 
upward (refer the figure below). [Use your income-expenditure calculator to get the exact 
value] 
On the other hand when price level increases to 150, interest rate increases in the 
economy, causing planned investment level to fall. Therefore planned aggregate spending 
line would shift downward (refer the figure below). [Use your income-expenditure 
calculator to get the exact value]
 shift of, movement along 
 to the right, to the left, down, up 
 50 billion, 200 billion, 100 billion, 150 billion [To get the value income-
expenditure calculator is needed].

a. Why the aggregate demand curve slopes downward The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the aggregate price level Is 120, and the quantity of...

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