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Economics for Today 9th Edition by Irvin Tucker
Edition 9ISBN: 978-1305507111Economics for Today 9th Edition by Irvin Tucker
Edition 9ISBN: 978-1305507111 Exercise 10
Which of the following reasons helps explain why the aggregate demand curve is downward sloping?
A) The real balances effect: Consumers spend more on goods and services when the price level falls because lower prices increase consumer purchasing power.
B) The producer-push effect: At less than full employment, increases in quantity demanded will raise price, and thus will motivate sellers to produce more.
C) The hidden inflation effect: As the price level rises, consumers fail to recognize that prices are higher, and consequently they fail to reduce expenditures on goods and services.
D) None of the answers above are correct.
A) The real balances effect: Consumers spend more on goods and services when the price level falls because lower prices increase consumer purchasing power.
B) The producer-push effect: At less than full employment, increases in quantity demanded will raise price, and thus will motivate sellers to produce more.
C) The hidden inflation effect: As the price level rises, consumers fail to recognize that prices are higher, and consequently they fail to reduce expenditures on goods and services.
D) None of the answers above are correct.
Explanation
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The producer push effect is an effect ac...
Economics for Today 9th Edition by Irvin Tucker
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