9. Ceteris paribus, the law of demand implies that as: a) Income increases, the
ID: 1126947 • Letter: 9
Question
9. Ceteris paribus, the law of demand implies that as: a) Income increases, the quantity of CDs deman ded will increase b) The price of CDs increases, the quantity of CDs demanded will decrease c) The price of CDs increases, the quantity of CDs demanded will increase d) The deman d for CDs increases, the price will decrease e None of theabove 10. The international effect suggests, with respectto the shape of the aggregate demand curve, that a a) Risein our domestic price level will increase our imports and reduce our exports, thereby redu cing the net exports component of b) Rise in our domestic price level will decrease our imports and increase our exports, thereby reducing the net exports component of c) Fall in our domestic price level will decrease our imports and increase our exports, thereby reducing the net exports component of d) Fall in our domestic priceleve will increase our imports and reduce our exports, thereby reducing thenet exports component of aggregate demand aggregate demand aggregate demand aggregate demand 11. According to the principle of comparative advantage, worldwide output and consumption levels will be highest when goods are produced in nations where a) The exchange rate is falling b) Inflation rates are low c) Exports are greater than imports d) Domestic opportunity costs arelowest 12. According tothe law of increasing opportunity costs: a) b) c) The more oneis willing to pay for resources, the larger will bethe possible level of production. Increasing the production of a particul ar good will cause the price of thegoodto rise In orderto produce additional units of a particul ar good, it is necessary for society to sacrifice increasingly larger amounts of alternativegoods. Only by keeping production constant can rising prices be avoided. d)Explanation / Answer
Answer.)
Q9.) b.) The price of CD's increases, the quantity of CD's demanded will decrease.
There is an inverse relationship between quantity demanded and its price. The people know that when price of a commodity goes up its demand comes down.
Q10.) a.) Rise in our domestic price level will increase out imports and reduce our exports , thereby reducing the net exports component of aggregate demand.
Increase in domestic inflation makes foreign goods relatively cheaper that lead to reduction in net exports.
Q11.) b.) Inflation rates are low.
Q12.) c.) in order to produce additional units of a particular good, it is necessary for society to sacrifice increasingly larger amounts of alternative goods.
Opportunity costs rise as more and more of a good is produced. Greater production of one good requires increasingly larger sacrifices of other goods.
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