Which of the statements best describes why the aggregate demand curve is downward sloping?
a. As the aggregate price level increases, consumer expectations about the future change.
b. As the aggregate price level decreases, the stock of existing physical capital increases.
c. An increase in the aggregate price level causes consumer and investment spending to fall, because consumer purchasing power decreases and money demand increases.
e. As a good's price increases, holding all else constant, the good's quantity demanded decreases.
Answer: c. An increase in the aggregate price level causes consumer and investment spending to fall, because consumer purchasing power decreases and money demand increases.
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An import quota is a
a. legal limit on the quantity of a good that can be imported per year b. legal requirement that a specified percentage of a final good's value must be produced domestically c. legal requirement that exports to a certain country must exceed a specified value before that country's product may be imported d. percentage tax on an imported product e. lump-sum tax on an imported product
The tradeoffs and connections between the goals of macroeconomics may be ___________ in the short run and the long run.
a. similar b. different c. identical d. problematic