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Explain how a fall in interest rates would affect aggregate demand (5 marks)

Aggregate Demand is equal to Consumption + Investment + Government Spending + (Exports - Imports). When interest rates fall, saving becomes less profitable, as consumers will receive a smaller additional pay...
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Answered by Rajiv S. • Economics tutor
3606 Views

Explain how interest rates can be used by a central bank to increase AD (9 marks)

Monetary policy is the use by the central bank of interest rates, money supply and the exchange rate to regulate the level of economic activity in the economy. Expansionary monetary policy is monetary policy...
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Answered by Michael O. • Economics tutor
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Explain with a diagram how a sugar tax affects the market equilibrium for A. coca cola, and for B. bottled water

A tax upon sugar will increase the costs for Coca Cola suppliers, therefore shifting the supply curve up and to the left. This will lead to a rise in the price of sugar from P1 to P2. Due to the increased pr...
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Answered by Eloise H. • Economics tutor
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What is the difference between a perfectly competitive market and a monopoly market

A perfectly competitive market is one which follows these certain rules: large number of buyers and sellers, homogenous products (which means that they are all the same therefore has little to zero different...
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Answered by Matthew L. • Economics tutor
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Explain some benefits of a Monopoly

A monopoly is where the market and one firm are coextensive.It has a downward sloping demand curve due to product differential. One key feature is that it has high barriers to entry. This means that it is ab...
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Answered by Satya V. • Economics tutor
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