490 18-6 v的 Why the Aggregate-Demand Curve Is Downward Sloping The Price Level and Consumption:The Wealth Effect (Arthur Pigou (1877-1959):) The Price Level and Investment:The Interest Rate Effect The Price Level and Net Exports:The Exchange- Rate Effect Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 18-6 Why the Aggregate-Demand Curve Is Downward Sloping • The Price Level and Consumption: The Wealth Effect（（Arthur Pigou（1877-1959)：） • The Price Level and Investment: The Interest Rate Effect • The Price Level and Net Exports: The ExchangeRate Effect
18-7 Why the Aggregate-Demand Curve Is Downward Sloping(1) The Price Level and Consumption:The Wealth Effect -A decrease in the price level makes consumers feel more wealthy,which in turn encourages them to spend more -This increase in consumer spending means larger quantities of goods and services demanded. Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 18-7 Why the Aggregate-Demand Curve Is Downward Sloping(1) • The Price Level and Consumption: The Wealth Effect – A decrease in the price level makes consumers feel more wealthy, which in turn encourages them to spend more. – This increase in consumer spending means larger quantities of goods and services demanded
490 18-8 Nv的 Why the Aggregate-Demand Curve Is Downward Sloping(2) The Price Level and Investment:The Interest Rate Effect -A lower price level reduces the interest rate,which encourages greater spending on investment goods. This increase in investment spending means a larger quantity of goods and services demanded. Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 18-8 Why the Aggregate-Demand Curve Is Downward Sloping(2) • The Price Level and Investment: The Interest Rate Effect – A lower price level reduces the interest rate, which encourages greater spending on investment goods. – This increase in investment spending means a larger quantity of goods and services demanded
18-9 Why the Aggregate-Demand Curve Is Downward Sloping(3) The Price Level and Net Exports:The Exchange- Rate Effect -When a fall in the price level causes interest rates to fall, the real exchange rate depreciates,which stimulates net exports. The increase in net export spending means a larger quantity of goods and services demanded. Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 18-9 Why the Aggregate-Demand Curve Is Downward Sloping(3) • The Price Level and Net Exports: The ExchangeRate Effect – When a fall in the price level causes interest rates to fall, the real exchange rate depreciates, which stimulates net exports. – The increase in net export spending means a larger quantity of goods and services demanded
190 18-10 Shifts in the AD Curve The five main shift factors of aggregate demand are: Foreign income. Expectations about future output or prices. Exchange rate fluctuations The distribution of income. Government policies. Economics ECONOMICS MANAGEMENT SCHOOL,TONGJI UNIVERSITY
Economics ECONOMICS & MANAGEMENT SCHOOL, TONGJI UNIVERSITY 18-10 Shifts in the AD Curve • The five main shift factors of aggregate demand are: Foreign income. Expectations about future output or prices. Exchange rate fluctuations. The distribution of income. Government policies