Answer to Question #114154 in Macroeconomics for Kg

Question #114154

A. Which of the following best describes the relationship illustrated by aggregate demand (AD) curve?
1. The inverse relationship between price and quantity demanded for any product
2. The negative relationship between the price level and levels of total production
3. It shows no relationship between the price level and real GDP
4. The inverse relationship between the price level and real output demanded

B. Based on the international trade effect, how would an increase in the price level in South Africa affect the exchange rate and aggregate demand?
1. rand will appreciate, the quantity of aggregate demand will decrease
2. rand will depreciate, the quantity of aggregate demand will increase
3. exchange rate will remain unchanged, the aggregate demand will decrease
4. exchange rate will increase, the aggregate demand will increase

C. Aggregate spending will increase if
1. real wealth falls
2. Interest rate falls
3. consumption falls
4. investment falls

Expert's answer

4) Aggregate demand curve is the inverse relationship between the price level and real output demanded.

2) Aggregate spending incrase if interest rate fall