What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?
Global markets have become increasingly important not only here but abroad. A decrease in imports, other things being equal, will mean more of total purchases will be from domestic suppliers, net exports will rise and aggregate demand will also rise. An increase in imports, other things being equal, will mean fewer of total purchases will be from domestic suppliers, net exports will fall and aggregate demand will also fall.
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The current price of wheat is $10 per bushel, but the equilibrium price of wheat is $5 per bushel. As a result, a. the quantity supplied of wheat exceeds the quantity demanded of wheat at $10 per bushel. b. the equilibrium quantity of wheat exceeds the quantity demanded at the $10 price
c. there is a surplus of wheat at the $10 price. d. All of the above are correct.
In the short run,
a. the labor market is always in equilibrium b. actual output can deviate from potential output c. crowding out is always complete d. total output is independent of spending e. spending is independent of total income