Question: Explain in words why rising prices reduce the multiplier effect of an autonomous increase in aggregate demand.

Explain in words why rising prices reduce the multiplier effect of an autonomous increase in aggregate demand.

Step by Step Solution

★★★★★

3.58 Rating (165 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Rising prices reduce the multiplier because the real val... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

165-B-E-M-E (102).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

Q:

Explain in words why the structural budget might show a surplus while the actual budget is in deficit. Illustrate your answer with a diagram likeFigure. T = Taxes-Transfers Surplus Deficit Gross...

Q:

1. Explain in words why a common-pool fishery will have "too many" fishermen. 2. Traffic congestion is a growing problem around the world. A town is trying to understand what to do about the...

Q:

Explain in words why the present value of $100 to be received in 10 years would decline as the interest rate rises.

Q:

5. Explain in words why rising prices reduce the multiplier effect of an autonomous increase in aggregate demand.

Q:

MACROECONOMICS (TEXTBOOK USED IS ECONOMICS FOR SOUTH AFRICAN STUDENTS FIFTH EDITION PHILIP MOHR AND ASSOCIATES) To round off this section, we illustrate the benefits of an FIGURE 19-6 An increase in...

Q:

MACROECONOMICS To round off this section, we illustrate the benefits of an FIGURE 19-6 An increase in productivity without any increase in remuneration increase in productivity without any...

Q:

Please help...thank you! PART A - MULTIPLE CHOICE QUESTIONS 1. Real GDP is nominal GDP adjusted for: A) double counting. B) changes in prices. C) population. D) imports. 2. What do a rubbernecking...

Q:

1.Which U.S. president implemented well-known tax cuts designed to stimulate aggregate demand? a. Jimmy Carter b. Ronald Reagan c. George H. W. Bush d. Bill Clinton 10 points QUESTION 2 1.____...

Q:

MCQ questions: 1. An increase in oil prices, such as the oil shocks in the 70s, lead to _______ thereby causing ________ a movement along the AS curve; cost-push inflation a leftward shift in the AS...

Q:

Everything else constant, the international trade effect indicates that aggregate expenditures in the domestic economy fall when: A) domestic prices fall relative to foreign prices. B) domestic...

Q:

What is the difference between the ability of a manager to retrieve information instantly on demand using an MIS and the capabilities provided by a DSS?

Q:

At 20C, the carbon resistor in an electric circuit connected to a 5.0-V battery has a resistance of 200 . What is the current in the circuit when the temperature of the carbon rises to 80C?

Q:

Question 2 3 When issuing a SQL command: INSERT INTO PRODUCT VALUES ( ' BRT - 3 4 5 ' , 'Titan NULL ) ; to enter product information but the associated V _ CODE ( or vendor code ) is u It is a false...

Q:

80. Polo Co. requires higher rates of return for projects with a life span greater than five years. Projects extending beyond five years must earn a higher specified rate of return. Which of the...

Q:

In March 2008, the Fed helped prevent the bankruptcy of Bear Stearns. However, in September 2008, the Fed and the Treasury let Lehman Brothers go bankrupt. What accounts for the different decisions?

Q:

The following table provides data on nominal gross domestic product and the money supply (Ml definition) in recent selected years. Compute velocity for each year. Do you see any trend? How does it...

Q:

During the year 2008, U.S. economic performance deteriorated sharply. Can this decline be blamed on inferior monetary or fiscal policy?

Q:

You are considering a capital budgeting proposal to make 'glow-in-the-dark' pacifiers for anxious first-time parents. You estimate that the equipment to make the pacifiers would cost you $50,000...

Q:

INSURABLE INTEREST-PROPERTY Instructions: Answer the questions following the descriptions of the events. A. Joe owned a home in Rose City. On July 1, 2008, he renewed his homeowners policy on the...

Q:

Brief answers only Raysut Cement is engaged in the business of export of cement to the GCC countries. In the past, the performance of the company had been up to the expectations. In line with the...