When the price level declines
A) the interest rate falls, and consumers borrow more funds, which causes a movement down along the aggregate demand curve.
B) interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left.
C) the interest rate rises, and consumers borrow fewer funds, which causes a movement up the aggregate demand curve.
D) the interest rate is not affected, so there is no movement along the aggregate demand curve.
A
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Assume that the above figure represents the domestic supply and demand for coffee.The domestic price with no trade is represented by $5.50 . The price with free trade is represented by $4.00
Assume that the government places a $1 per pound tariff on imported coffee, which decreases the domestic quantity demanded of coffee by 100 million pounds and increases domestic production by 100 million pounds. Draw the rectangle that would represent the amount of tax revenue that the government would realize from this tax and calculate the dollar figure.
Explain the effects of a permanent increase in the U.S. money supply in the short run and in the long run. Assume that the U.S. real national income is constant
What will be an ideal response?