Business, 14.11.2019 01:31 brandonkelly104

Describe how, if at all, each of the following developments affects the ad and/or ia curves:

a. individuals become more optimistic about their future incomes, and therefore consume more out of a given amount of disposable income than before.

b. exchange rates are floating, and american goods become more fashionable – that is, foreign demand for american goods at a given real exchange rate increases.

c. anti-trust laws are relaxed, so firms charge higher prices for a given level of costs.

d. the demand for money increases (that is, consumers’ preferences change so that at a given level of i and y they want to hold more real balances than before).

e. investment demand becomes less sensitive to changes in the interest rate.

f. oil prices increase, and at the same time consumption for a given level of disposable income falls.

suppose that there is a technological disaster that makes workers less productive than before. assume that initially output is at its natural rate.

a. how, if at all, does this affect the ia curve?

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Describe how, if at all, each of the following developments affects the ad and/or ia curves:
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