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If businesses buy fewer capital goods, and nothing else changes, then total expenditures on U.S....

Question:

If businesses buy fewer capital goods, and nothing else changes, then total expenditures on U.S. goods and services (TE) will decrease. And if TE decreases, then _ will decrease; consequently, the _ curve will shift _.

a. aggregate demand (AD); AD; rightward

b. short-run aggregate supply (SRAS); SRAS; leftward

c. aggregate demand (AD); AD; leftward

d. interest rates; AD; leftward

e. prices; AD; rightward

Aggregate Demand Curve:

Aggregate demand curve shows the demand for all goods and services in an economy at any given price level. Aggregate demand curve is a downward sloping curve when price (CPI) is on the vertical axis and quantity (real GDP) is on the horizontal axis. The curve is composed of consumption, investment, government purchases and net exports.

Answer and Explanation:

Option C is correct. The aggregate demand shows the quantity of all goods and services demanded in an economy at any given price level. The four...

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Aggregate Supply and Aggregate Demand (AS-AD) Model

from Economics 102: Macroeconomics

Chapter 7 / Lesson 3
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