💬 👋 We’re always here. Join our Discord to connect with other students 24/7, any time, night or day.Join Here!

JG

Jennilyn G.

Microeconomics

1 week ago

. Demonstrate graphically how U.S. consumers benefited from the end of the quota system.

University of Minnesota - Duluth

Answer

Show, using the AD/AS model, how governments can use monetary policy to decrease the price level.

Discussion

You must be signed in to discuss.

Video Transcript

monetary policy to lower the price level would be known as contractionary monetary policy. And one of the things that could fall under contractionary monetary policy would be an increase in interest rates and by increasing interest rates were going to discourage investment and consumption, thereby reducing aggregate demand. So if we were to decrease aggregate demand, we're going to see that c. R a. D curve shift to the left from 81 to 82. This new shift is giving us, of course, a new equilibrium, which we can see right here, which is at a lower price level. So, by lowering aggregate demand through this use of contractionary monetary policy were seen as a result that the price level has been lowered.

University of Minnesota - Duluth
Top Microeconomics Educators
Srikar K.

Temple University

Aanand S.

Numerade Educator

Bharat K.

Kathmandu University

Jin-Hwan R.

Numerade Educator

Microeconomics Bootcamp

Lectures

Join Bootcamp