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C211(Global Economics for Managers) STUDY GUIDE LATEST UPDATED SOLUITION.
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C211(Global Economics for Managers) STUDY GUIDE LATEST UPDATED SOLUITION.
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C211(Global Economics for Managers) STUDYGUIDE LATEST UPDATED SOLUITION.
Policymakers can influence aggregate demand with fiscal policy.
✔✔1. An increase in government purchases or a cut in taxes shifts the
aggregate-demand curve to the right.
2. A decrease in government purchases or an increase in taxes shifts the
aggregate-demand curve to the left.
Shift in demand curve = decrease in demand
✔✔Demand curve shifts left.
Any change that lowers the quantity that buyers wish to purchase at any
given price shifts the demand curve to the left.
Shift in demand curve = increase in demand
✔✔Demand curve shifts right.
Any change that raises the quantity that buyers wish to purchase at any
given price shifts the demand curve to the right.
Variable that can shift the demand curve:
✔✔-Income
-Prices of related goods
-Tastes
-Expectations
-Number of buyers
, Effects of a tariff
✔✔A tariff reduces the quantity of imports and moves a market closer to the
equilibrium that would exist without trade.
Effects of a tariff
✔✔-Price rises by the amount of the tariff
-Domestic quantity demanded decreases
-Domestic quantity supplied increases
-Reduces the quantity of imports
--Domestic sellers are better off
-Domestic buyers are worse off
Consumer surplus
✔✔- Amount a buyer is willing to pay for a good, minus amount the buyer
actually pays for it
-Measures the benefit buyers receive from participating in a market
-Closely related to the demand curve
Producer surplus
✔✔- Amount a seller is paid for a good minus the seller's cost of providing it.
- Closely related to the supply curve.
- A higher price raised producer surplus
Democracy
✔✔Right to freedom of expression and organization.
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