Chapter 9 marco - 1 Describe the impact of rising interest...

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Chapter 12 / Exercise 14
Financial Markets & Institutions
Madura
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1. Describe the impact of rising interest rates on consumer spending. The impact of rising interest rates on consumer spending is less business investment. Consumers will not investment their money into business if the interest rate is too high. A decrease in business investment will lead to a drop in quality demanded for real GDP. 2.When the economy is operating at full employment, why is an increase in aggregate demand not helpful to the economy? 3. When the economy is hit with a supply shock, such as oil prices rising from $25 a barrel to $75 a barrel, why is this doubly disruptive and harmful to the economy? 4. Explain why the aggregate supply curve is positively sloped during the short run and vertical in the long run.
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Chapter 12 / Exercise 14
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Madura
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