How does a change in investment spending affect aggregate demand?
What will be an ideal response?
Government spending might change for any of a number of reasons, including a change in priorities resulting from a change in decisions by elected government officials. If government spending increases, aggregate demand is likely to increase. If government spending decreases, aggregate demand is likely to decrease.
You might also like to view...
The conclusion that a monopoly results in lower output and higher prices than perfect competition relies on the assumption that
A) the demand curve for a monopoly is horizontal. B) consumers are ignorant of the effects of monopoly. C) the costs of production are the same whether the industry is perfectly competitive or a monopoly. D) elasticity of demand varies along the market demand curve.
Great Nuggets finds that there is a clear gender difference in the demand for their chocolates. Men have very little price sensitivity and tend to buy whatever the sales clerk recommends. Women, on the other hand, tend to ask many questions about product quality and attempt to maximize the quantity available for the price. Great Nuggets would like to implement a two-tier pricing system based on gender. What (nonlegal) problems would it encounter?
What will be an ideal response?