Answered You can hire a professional tutor to get the answer.
205: Principles of Macroeconomics Mark Moore Fall 2007 Problem Set 6 1. Why does the aggregate demand curve slope down (in Y-P space)?
205: Principles of Macroeconomics Mark Moore Fall 2007 Problem Set 6 1. Why does the aggregate demand curve slope down (in Y-P space)? 2. Suppose that firms become more optimistic about future earnings (i.e., business confidence increases). A. Show the effect of the increase in business confidence in income-expenditure and ADAS diagrams. B. What is the effect on output and the price level? What can you say about the size of the output changes in the income-expenditure and AD-AS diagrams? C. (More difficult) Given the effects you described in part b, what is the effect on consumption. {Hint: there are two effects, but you may assume the price effect is small.} D. (More difficult) What must happen to private saving? Explain the mechanism by which private saving changes.
