What are the three forces that cause the aggregate demand curve to slope down? Explain
What will be an ideal response?
The three forces are the real-balance effect, the interest rate effect, and the open-economy effect. An increase in the price level causes the purchasing power of money balances to fall, interest rates to increase and borrowing to fall, and imports to increase and exports to decrease. Each of these cause total planned real expenditures to decrease.
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The entrepreneur will typically have the most difficulty controlling
a. price b. average total cost c. average variable cost d. marginal cost e. total cost
For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
a. There are many close substitutes for this good. b. The good is a luxury. c. The market for the good is broadly defined. d. The relevant time horizon is long.