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ECO372-FinalExam-STUDYGUIDE

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Wages and salaries

 

Explanation: The majority of people earn a living by working for an employer, while a minority of the population earns money from entrepreneurial endeavors.  

 

8. Imagine a country were to increase aggregate expenditures by 20. What will happen to the AD Curve?

Shift right by more than 20

 

Explanation: As the country spends more, it will create income that will be redistributed through wage income and cause demand to increase.   

 

 

9. What is the main function of aggregate demand management policies?

 

To control aggregate levels of spending within the economy

 

Explanation: Government policies are often needed to ensure that aggregate spending is correlating effectively with actual demand.

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