How does the aggregate demand curve differ from a demand curve for, say, bananas?
What will be an ideal response?
The demand for bananas expresses the quantities that people are willing to buy at various prices. The aggregate demand curve indicates the level of output that is produced when the goods market is in equilibrium at various rates of inflation. The demand for bananas arises from consumer preferences, while the aggregate demand curve arises from monetary policy and the sensitivity of expenditures to the real interest rate.
You might also like to view...
In an ordinary election between two candidates, once both candidates have positioned themselves in the political middle, neither has an incentive to move back toward one of the extremes
Indicate whether the statement is true or false
Holding all else constant, an increase in the real interest rate on Mexican assets will ________ the supply for dollars in the foreign exchange market and ________ the equilibrium Mexican peso/U.S. dollar exchange rate.
A. decrease; decrease B. decrease; increase C. increase; increase D. increase; decrease