contestada

Match the cause for the negatively sloped aggregate demand curve on the left with the correct term from the right.

1. As prices rise, the cost for businesses to finance new equipment increases, causing a drop in quantity demanded of real GDP.

2.The purchasing power of money held in savings accounts falls as prices rise.

3.As prices rise in the U.S., foreigners purchase fewer U.S. goods.

OPTIONS:

a.The Aggregate Demand Effect

b. The Wealth Effect

c. The Interest Rate Effect

d. The Expport Effect

Respuesta :

In the given context option 1, 2 & 3 match with a, c & d respectively.

Option: 1-a, 2-c, 3- d.

Explanation:

  • In cost & demand effect when the price of any commodity increase, the demand of that particular commodity decrease and people opt for substitute product. That effects GDP also.
  • Money in savings account provides interest per month in a fixed rate. If the price of product increases suddenly the purchasing capacity of that money will diminish correspondently.
  • When the price of commodity rise, people go for buying imported product which may available in lesser price rather than the country's own produced commodity.

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