What is the relationship between aggregate expenditure and aggregate demand?
What will be an ideal response?
An aggregate expenditure curve traces the various levels of planned spending that occur at different income levels. The price level is fixed along the AE curve. An aggregate demand curve, in contrast, traces the various levels of planned spending that occur at different price levels. The position of the AD curve is determined by considering the impact of different price levels on the AE curve. A decrease in the price level shifts the entire AE curve upward, resulting in a higher level of equilibrium output. The price level and output level thus associated represent a point on the AD curve.
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Based on the figure above, as a result of international trade, U.S. domestic production ________ airplanes per year
A) decreases by 200 B) increases by 300 C) decreases by 100 D) increases by 500 E) increases by 200
The prisoners' dilemma is used to illustrate the basic idea that
a. oligopolistic firms would be better off if they collude, but each has an incentive to cheat on the collusive agreement. b. oligopolistic firms are always worse off when they collude. c. oligopolistic firms never have an incentive to cheat on collusive agreements, unlike prisoners. d. students who cheat on economics exams end up in jail.