Explain through the component parts of aggregate demand why the aggregate demand curve slopes down with respect to the inflation rate. Be sure to discuss two channels through which changes in inflation rates affect demand
What will be an ideal response?
A fall in the inflation rate lowers real interest rates. Lower rates increase investment, thereby increasing aggregate demand. Lower interest rates also cause depreciation of the domestic currency, increasing net exports and aggregate demand.
Economics
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In the figure above, what is the size of the multiplier?
A) 0.25 B) $2 trillion C) 4.0 D) $0.5 trillion E) More information is needed to determine the size of the multiplier.
Economics
Which of the following is not a typical customer in the wholesale market for foreign exchange?
a. A central bank b. A tourist c. A large company d. The government e. A supranational agency
Economics