Why does a reduction in aggregate demand reduce real output rather than the price level?
80121
Because due to the lack of demand, not only do suppliers need to reduce the price to move the goods, but since the total units sold would be reduced, there is no need for a manufacturing surplus.
199954
An inflationary gap means that demand has outstripped supply. This typically leads to inflation of prices because there is less supply to meet the demand, if the demand curve for the product in question is inelastic, prices will rise because the supply curve will have shifted to intersetct the demand curve at a higher price point.\n\nOr more simply put, people will be willing to pay more for the product because it's not as easy to come by.
236826
High Supply, Low demand = Lower Price\n\nLow Supply and High demand = High Price\n\nSimple economics.  Our gas prices work this way too.. Very few refineries to refine gas, which causes lower supplies.
474948
Well, it won't run out completely, but it is projected that demand will outpace production within that time frame.  This is based on Hubbert's Curve and if you're interested, try researching Peak Oil.  Regardless, when demand outpaces consumption, expect the price of gasoline, and anything else associated with petroleum, to increase in price drastically.
606751
When interest rates go up, the economy tends to slow down and consumption with it the sales would likely go down.  The opposite happens with interest rates going down.\n\nWhen a currency gains value with respect to other currencies, it's cheaper to buy goods abroad, so the sales for the local good would go down.  If the currency loses value, the opposite happens.\n\nThere might be exceptions with mandatory goods like bread or Giffen goods.
265302
GDP doesn't account for black markets or "non-monetary transactions." Also, GDP is distorted by cross-border trade within companies, which shouldn't really count as production. Finally, it's difficult for GDP to account for varying quality in consumption goods across time. The accuracy of GDP in measuring output depends on your definition of accuracy, but there's definitely some distortion. See the Wikipedia article.
996718
No, but it decreases the cost of collection.
73553
The value of money is relative. If the government started printing excess money, it would drive down the value of our money relative to the value of goods and relative to the value of other currencies around the world.\n\nNot only would we fail to reduce our debt, but we would destabilize our economy.
165102
Because it reduces prices for consumers and drives producers to be more efficient.  But it has helped the economy by eliminating many annoying small businesses.
157167
Wow.  Um, it's not the amount of physical money we have, it's the *worth* of the physical money.  The gov't can't just print up an extra mil to cover the cost of stuff, that would cause the worth of the dollar to go down compared to other countries money.
65836
A substantial increase in inflation will diminish the purchasing power of money.  Say you kept $100 under your bed.  If the inflation rate jumped up to 10% (high), then your $100 can't buy $100 of stuff anymore.  Something that cost $100 last year would cost $110 now.  In essence, you lost 10% of your purchasing power.
581075
From the choices, it looks like A.  Decrease.\n\nWith lower margins (see monopoly versus perfect competition), the profits slim down over time and there's less room for individual growth even with the total size of the industry increasing.
435730
an increase in the money suply would have an increase inthe real gross domestic product, this is because we assume that the production level in the short run is of static equilibrium and thus more money is supplied which would increase the level of unemployment a this would increase the leve of productivity and also the real gross domestic product
615592
when oil prices go up, It costs more to make & deliver goods. In turn the price of goods go up. Hence inflaton.
412718
We buy less stuff during a recession (because we have less money to spend), so invariably we end up buying less stuff from overseas, so less stuff is imported in, reducing the deficit.
139247
efficient capital market allows more money to be invested, which means more goods and services produced, which means lower prices. \n\nyou get more investment b/c efficient market has zero gap between the rate that users of capital pay, and the rate that owners of capital receive. In real world, this gap is non-zero, so less capital is supplied to the market; and less capital is demanded.
436840
1. B.  The others are just moving along the supply curve, not shifting it.\n2. E.  Just try it out with a simple graph.  The entire equilibrium moves.