According to Say\'s Law: In the AS/AD Model, as the price level rises, the holde
ID: 1177723 • Letter: A
Question
According to Say's Law:
In the AS/AD Model, as the price level rises, the holders of money become richer and buy more. This is one reason why the aggregate demand curve is downward sloping.
In the 1990's, the price level in the U.S. rose relative to the price level in Japan. Other things held equal, one would expect:
A. demand and supply in the economy can never be in disequilibrium. B. demand and supply in the economy can never be in equilibrium. C. people do not save. D. prices never rise in a market economy.Explanation / Answer
Q1.option A
Demand and supply is an Equilibrium condition that is in equilibrium the aggregate demand for commodities equal their aggregate supply with the disequilibrium in the market Economy will be of the IS curve.
Therefore the demand and supply will never be in disequilibrium.
Q 2. False
In the As/AD model as the price level falls, the holder of money become richer and buy more.
This is one reason why the aggregate demand curve is downward sloping and is called the money wealth effect.
Q3. Option A.
The price level in the US rose relative to the price level in Japan other things held equal, one would expect
US Exports to Japan would rise and US Imports from Japan would decline.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.