Classify the events according to their impact on aggregate demand (AD). 1. A dramatic decline in the average price of houses will .
2. Increased concern that a recession is looming will .
3. An announcement by the central bank to maintain its existing monetary policy will .
4. A reduction in government spending will .
5. A dramatic improvement in the stock market, causing investors' wealth to rise, will .
6. A recession occurring in a trading partner's economy will .
7. An increase in income tax rates on individuals earning more than $450,000 per year will .

WORD BANK
not change AD.
increase AD.
decrease AD.

1. decrease AD.

2. decrease AD.

3. not change AD.

4. decrease AD.

5. increase AD.

6. decrease AD.

7. decrease AD.

Explanation:

Aggregate demand (AD) measures the total amount of spending that occurs in an economy and can be segmented into consumption spending, government spending, investment spending, and net exports. A key principle in this example is that AD increases when there are increases to any of these individual components of AD and decreases when the individual components decrease.

Several of the events in this example describe direct changes in the components of AD:

    - A reduction in government spending leads to a decline in AD as it is associated with fewer goods and services being purchased.

    - An increase in tax rates reduces disposable income and therefore causes consumption spending to decline.

    - When recessions occur abroad, foreigners purchase fewer imported items. (e.g., a recession in Europe means that American firms will export less to Europe.) Thus, net exports decline as trading partners experience recessions, which causes AD to fall.

    - Consumer confidence also impacts spending in that people are more inclined to make purchases when feeling optimistic and more inclined to save when feeling concerned about the economy.

    - Wealth is another factor that affects AD. People buy more goods and services when they have more wealth and vice versa. Therefore, an increase in wealth associated with rising stock prices increases AD, whereas falling wealth from declining housing prices reduces AD.

    - Changes in the money supply also can lead to AD shifts. When the money supply grows more rapidly, there are increases in spending and the AD shifts to the right, and vice versa. In this example, growth in the money supply is said to be stable, implying that AD will neither increase nor decrease.

absolute poverty the condition of having too little income to buy the necessities-- food, shelter, clothing, health care.

achieved status a social position (status) obtained through an individual's own talents and efforts.

affirmative action the requirement that employers make special efforts to recruits hire and promote qualified members of previously excluded groups including women and minorities.

aggregate a collection of unrelated people who do not know one another but who may occupy a common space--for example, a crowd of people crossing a city street.

agrarian societies societies in which large scale cultivation using plows and draft animals is the primary means of subsistence.

alienation the separation or estrangement of individuals from themselves and from others.

amalgamation the biological as well as cultural assimilation (merging) of racial or ethnic groups.

anomalies in science observations or problems that cannot be explained or solved in terms of a prevailing paradigm.

anomie a breakdown or confusion in the norms, values, and culture of a group or a society. a condition of relative normlessness.

anomie theory the theory suggesting that deviance and crime occur when there is an acute gap between cultural norms and goals and the socially structured opportunities for individuals to achieve those goals.

anticipatory socialization the process of taking on the attitudes values and behaviors of a status or role one expects to occupy in the future.

apartheid the recent policy of racial separation in south africa enforced by leg

explanation:

trade regulation is a field of law, often bracketed with antitrust (as in the phrase “antitrust and trade regulation law”), including government regulation of unfair methods of competition and unfair or deceptive business acts or practices. antitrust law is often considered a subset of trade regulation law. franchise and distribution law, consumer protection law, and advertising law are sometimes considered parts of trade regulation law.

in general the theory of economics says that the more open to trade a country is the better   the result for the same country and the whole economies.

in real life countries impose taxes, quotas, etc which is not so good for the economies.

this kind of commercial war between the usa and china is slowing down the growth of the whole world so we can say that it is a draw back of trade regulations. and the free trade agreements are benefits of trade regulations.