Business, 03.03.2020 05:56 tati7149

Why does the explanation for the inverse relationship between the price level and quantity demanded depicted by the aggregate demand curve differ from the relationship between price and quantity demanded depicted by a demand curve for a specific good?

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Demand curve for individual goods is drawn on assumption that price changes for one good and others remain constant. But for Aggregate demand considers change in price level of multiple goods and services.

Explanation:

When considering demand curve of individual goods there is inverse relationship between price and quantity demanded of a good. The price change is pertaining to one good and the assumption is that all other good's prices remains constant and also that income level remains constant. As the price of a good Y rises quantity demanded for that good falls.

On the other hand considering aggregate demand, it looks at changes in price level. This cuts across various goods and also change in income level. So there is no assumption of price of some products being constant in aggregate demand curve. It however assumes supply of money by the government is constant.

The inverse relationship of price to quantity demanded (downward sloping curve) is affected by wealth effect, interest rate effect, and net exports effect.

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Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan

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Setiap tindakan memiliki reaksi. ucapan itu ditulis oleh newton. itulah hukum ketiga-nya.

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