The factors that affect the amounts that consumers, businesses, government, and foreigners wish to purchase at each price level are the
A) real-balances, interest-rate, and foreign purchases effects.
B) determinants of aggregate supply.
C) determinants of aggregate demand.
D) sole determinants of the equilibrium price level and the equilibrium real output.

Question

Quizplus · Accepted Answer

The determinants that affect the amounts consumers, businesses, government, and foreigners wish to purchase at each price level are the determinants of aggregate demand. These include changes in income, consumer expectations, wealth, government spending, taxes, and the exchange rate for net exports. Real-balances and interest-rate effects are specific components of the aggregate demand curve, while foreign purchases effects refer to the impact of foreign spending on domestic aggregate demand. However, neither of these alone represents all the factors that affect aggregate demand. The equilibrium price level and output are then determined based on the aggregate demand and supply curves.

The Factors That Affect the Amounts That Consumers, Businesses, Government