Other things being equal, if the national income of our major international trading partners were to rise, our (Australia's): Group of answer choicesaggregate demand curve would shift to the right.short-run aggregate supply curve would shift to the left.short-run aggregate supply curve would shift to the right.aggregate demand curve would shift to the left.
Question
Other things being equal, if the national income of our major international trading partners were to rise, our (Australia's): Group of answer choicesaggregate demand curve would shift to the right.short-run aggregate supply curve would shift to the left.short-run aggregate supply curve would shift to the right.aggregate demand curve would shift to the left.
Solution
If the national income of Australia's major international trading partners were to rise, it would mean that these countries now have more income to spend on goods and services. Given that Australia is a trading partner, it is likely that a portion of this increased income would be spent on Australian goods and services. This increase in demand for Australian goods and services from abroad would increase the overall demand for Australian goods and services.
Therefore, the aggregate demand curve for Australia would shift to the right. This is because the aggregate demand curve shows the quantity of goods and services that households, firms, the government, and customers abroad want to buy at each price level. If foreign countries want to buy more Australian goods and services, this increases the quantity of goods and services demanded at each price level, shifting the aggregate demand curve to the right.
Similar Questions
If wages and other costs fully adjust to changes in prices in the long run, the long-run aggregate supply curve isGroup of answer choicesvertical.horizontal.positively sloped.negatively sloped.
The Australian economy is initially in long-run equilibrium. The Federal government now increases its spending on defence. In the short run: the aggregate demand curve shifts left and the short-run aggregate supply curve shifts left. the aggregate demand curve shifts left and the short-run aggregate supply does not shift. the aggregate demand curve shifts right and the short-run aggregate supply curve does not shift. the aggregate demand curve shifts left and the short-run aggregate supply curve shifts right. the aggregate demand curve shifts right and the short-run aggregate supply curve shifts right.
The change in price that results from a rightward shift in demand will be greater ifGroup of answer choicesthe supply curve is horizontal than if the supply curve is upward sloping.the supply curve is relatively steep than if the supply curve is relatively flat.the supply curve is upward sloping than if the supply curve is vertical.the supply curve is horizontal than if the supply curve is vertical.
Multiple Choicerightward shift in the economy's aggregate demand curve.leftward shift in the economy's aggregate supply curve.leftward shift in the economy's aggregate demand curve.movement along an existing aggregate demand curve.
Which of the following will result in a rightward shift of the aggregate demand curve?ResponsesAn increase in the income tax rateAn increase in the income tax rateAn increase in exportsAn increase in exportsA decrease in the price levelA decrease in the price levelA decrease in household incomeA decrease in household incomeA decrease in government spending
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