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ECO 210 Chp 9 HA - and the international-trade effect and...

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Macroeconomics 210 Chapter 9: Aggregate Demand and Aggregate Supply Analysis Homework Assignment Chapter 9 (pg. 315 #1.1, 1.2, 1.3) 1.1) a) A lower price level decreases the rate of interest, which increases private investment and consumption. b) A lower price level increases the real wealth of households, thereby increasing household consumption. c) A lower price level makes US exports less expensive, thereby increasing net exports. 1.2) The aggregate demand curve slopes downward due the wealth effect, the interest-rate effect,
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Unformatted text preview: and the international-trade effect, and the demand curve for an individual product slopes downward due to consumers substituting the more expensive product for cheaper goods. 1.3) a) Increases in the interest rate variable make the aggregate demand curve to shift to the left. b) Increases in the real wealth variable will make the aggregate demand curve shift to the right. c) An increase in net exports will shift the aggregate demand curve to the right....
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