Chapter 12: Aggregate Demand Curve (page 428)
What is the national income multiplier?
tool for measuring change between national income and aggregate demand
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In the 1970s, Toyota was able to increase its American sales despite interest rates on auto loans surging as high as 17.5%. In contrast, after 2007, auto loan rates fell to their lowest levels in history; car sales also declined. Explain why. (Hint: Examine the connection between inflation and interest rates on loans.)
A rise in productivity increases potential output, but some worry that demand for the additional output will be insufficient even in the long run. How would you respond?
What does this say about the causes of the recessions in each case?
What are the 4 components of aggregate demand?
Why does the aggregate demand curve slope down?
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