1. Real-Balances Effect

question 237

Multiple Choice

1. Real-Balances Effect
2. Household Expectations
3. Interest-Rate Effect
4. Personal Income Tax Rates
5. Profit Expectations
6. National Incomes Abroad
7. Government Spending
8. Foreign Purchases Effect
9. Exchange Rates
10. Degree of Excess Capacity
Answer the question based on the accompanying list of factors that are related to the aggregate
demand curve. Which of the factors best explain the downward slope of aggregate demand curve?

• A) 2, 4, and 6
• B) 7, 9, and 10
• C) 1, 3, and 8
• D) 4, 6, and 7

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Definitions:

Money Income

The total amount of monetary earnings or receipts a person or household receives within a specific period.

Utility-Maximizing

The behavior or principle where individuals or entities choose options that increase their satisfaction or utility to the greatest extent.

Marginal Utility

The additional satisfaction gained from consuming an additional unit of a good or service.

Hypothetical Consumer

A theoretical or model consumer whose purchasing decisions and behavior are used to analyze the demand side of the market.