Problem 1
Is aggregate demand a specific dollar amount? For example, is it correct to
say that aggregate demand is
Problem 2
Explain each of the following: (a) real balance effect, (b) interest rate effect, and (c) international trade effect.
Problem 3
Graphically portray (a) a change in the quantity demanded of Real GDP and (b) a change in aggregate demand.
Problem 4
There is a difference between a change in the interest rate that is brought
about by a change in the price level and a change in the interest rate that is
brought about by a change in some factor other than the price level. The first
will change the quantity demanded of Real GDP, and the second will change the
Problem 5
The amount of Real GDP (real output) that households are willing and able to buy may change if there is a change in either (a) the price level or (b) some nonprice factor, such as wealth, interest rates, and the like. Do you agree or disagree? Explain your answer.
Problem 6
Explain what happens to aggregate demand in each of the following cases: a. The interest rate rises. b. Wealth falls. c. The dollar depreciates relative to foreign currencies. d. Households expect lower prices in the future. e. Business taxes rise.
Problem 7
Explain what is likely to happen to U.S. export and import spending as a result of the dollar depreciating in value.
Problem 8
Explain how expectations about future prices and income will affect consumption.
Problem 9
Explain how expectations about future sales will affect investment.
Problem 10
How will an increase in the money supply affect aggregate demand?
