if the money wealth, interest rate, and international effects reduce the quantity of aggregate demand by 3 percent when the price rises by 6 percent and the multiplier is 2, then the slope of the aggregate demand curve is:

Question

04-11-2022
Business

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if the money wealth, interest rate, and international effects reduce the quantity of aggregate demand by 3 percent when the price rises by 6 percent and the multiplier is 2, then the slope of the aggregate demand curve is:

Answer :

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KrishnaMitra KrishnaMitra · Answer 1 · 2022-11-14T10:34:07-05:00

The slope of the aggregate demand curve is -2 if money wealth, interest rates, and overseas effects cut aggregate demand by 3% when prices increase by 6% and the multiplier is 2.

Give a brief account on aggregate demand curve.

Households (personal consumption), other businesses (investment), government entities (government purchasing), and international markets are the four sources of demand that businesses must contend with (net exports). The relationship between the total amount of goods and services demanded (from all four sources of demand) and the price level, with all other factors affecting spending being constant, is known as aggregate demand.

The link between two variables—the amount of output that is required and the overall price level—is depicted by the aggregate demand curve. Aggregate demand is stated as a function of a constant nominal money supply level. The AD curve can change due to a variety of variables. Increases in the money supply, government spending, independent components of investment or consumption spending, or reductions in taxes all lead to rightward shifts.

To solve the question :

Here,

Slope of aggregate demand = SAD

Change in Price = CP

Change in Quantity = CQ

[tex]SAD = -\frac{CP}{CQ}[/tex]

[tex]SAD=-\frac{6}{3}[/tex]

SAD = -2

Slope of aggregate demand is -2.

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