ad as quiz Flashcards
what would causes a downward parallel shift in the AE curve and a leftward shift in the AD curve
reduction in gov purchases
if the AS curve is upwards sloping a negative shock in AD will cause what
it will cause a decrease in both GDP and prices
effect of a decrease in AS
there will be less goods at any given price this also is a leftward shift on the AS curve
what relationship does the AS curve show
it shows the relationship between price level and supply ( the relationship is positive)
in demand determined output a exogenous change in price level will cause what
a shift in the AE curve ( people will buy more stuff) and movement along the AD curve ( cuz price level isn’t a factor that causes a shift in ad)
what will a increase in tax rates cause
it will cause a negative demand shock
what will a exogenous fall in domestic price level cause
it will cause a increase in real wealth and a rise in desired consumption
one reason why AD curve is downward sloping
increase in price cause demand to fall because people will consume less of that good and substitute that good with cheaper foreign subs
change in autonomous desired expenditure will make the simple multiplier equal to what
the ratio of the horizontal shift of the AD curve to the change in autonomous expenditure
