ECO201 CUNY Borough Aggregate Demand Curve And GDP Discussion

Anonymous

Question Description

1. Discuss the difference between an increase in the aggregate demand curve and an increase in the quantity of real GDP demanded. Include discussion of how the price level relates to each event.

2. What are the major factors that determine investment, and what impact does each have on aggregate demand?

3. Describe the difference between a microeconomic demand curve and an aggregate demand curve.

4. The aggregate demand curve portrays the relationship between price level and real GDP. What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each.

5. What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?

6. Explain how changes in the stock of capital affect aggregate supply.

7. What is the natural level of output?

Tutor Answer

whgrab
School: Duke University

check this and let me know if you need any help

ECO 201
Thesis: Aggregate demand is related to the demand whereas the quantity of real GDP
demanded is related to the quantity demanded. Increase in the aggregate demands curve
shows the number of total goods and services required by every sector of the economy at all
the price levels. On the other hand, a growth in the real GDP shows the number of final goods
and services required at a specific price level.
1. Economic implication of the legalization of medical and recreational marijuana


Running head: ECO 201

1

ECO 201
Instructor name
Student name
Date

ECO 201

2

Aggregate demand is related to the demand whereas the quantity of real GDP
demanded is related to the quantity demanded. Increase in the aggregate demands curve
shows the number of total goods and services required by every sector of the economy at all
the price levels. On the other hand, a growth in the real GDP shows the number of final goods
and services required at a specific price level.
Major factors that determine the investment are interest rates, technology, and
physical wealth. The investment for capital goods is done with borrowed funds. Change in
interest rate will change the cost of borrowings. Higher interest rate requires less investment
resulting in a decrease in aggregate demand. Advancement in technology increases the need
for capital to invest. New technology necessitates capital, and technological advancement
increases investment and aggregate demand. Physical wealth is the capital and business
sector is less inclined to make an investment in capital goods. Increase in the capital will
reduce the aggregate demand and investment.
The microeconomic demand curve shows the relationship between price and demand
of one good, whereas, aggregate demand curve shows the relationship between price and
demand of all the goods and services demanded. The microeconomic demand curve has price
and quantity of one good on y-axis and x-axis respectively; on the other hand, aggregate
demand curve has the total price and complete quantity of all the goods and services on the yaxis and x-axis respectively. (How do regular and aggregate supply and demand differ?,
2018)
The three reasons for the inverse relationship among the price level and real GDP are
wealth effect, interest-rate effect, and open economy affect. Wealth effect means the decrease
in prices will increase the purchasing capacity of the people encouraging them to spend more.
This will increase the quantity of real GDP. For example, product costs $10 and a customer

ECO 201

can afford to buy one unit. If the same product costs $5, then the customer can afford 2 units.
Interest rate effect means the decrease in interest rate it will increase the borrowing capacity
to buy more goods and services. This will increase the quantity of real GDP. Net exports
effect means when the price of do...

flag Report DMCA
Review

Anonymous
I was on a very tight deadline but thanks to Studypool I was able to deliver my assignment on time.

Anonymous
The tutor was pretty knowledgeable, efficient and polite. Great service!

Anonymous
Heard about Studypool for a while and finally tried it. Glad I did caus this was really helpful.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4
Similar Questions
Related Tags

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors