Determinants of aggregate demandThe following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1AD1 to AD2AD2, causing the quantity of output demanded to rise at all price levels. For example, at a price level of 140, output is now $400 billion, where previously it was $300 billion. 170160150140130AD2120AD,11010090100200300400500600700800OUTPUT (Billions of dollars)The following table lists several determinants of aggregate demand.Complete the table by indicating the change in each determinant necessary to increase aggregate demand.Change Needed to Increase ADWealthTaxesExpected rate of return on investmentIncomes in other countriesPRICE LEVEL

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Answered: 170 160 150 140 130 AD2 120 AD, 110 100…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Determinants of aggregate demand

The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1AD1 to AD2AD2, causing the quantity of output demanded to rise at all price levels. For example, at a price level of 140, output is now $400 billion, where previously it was $300 billion.

170
160
150
140
130
AD2
120
AD,
110
100
90
100
200
300
400
500
600
700
800
OUTPUT (Billions of dollars)
The following table lists several determinants of aggregate demand.
Complete the table by indicating the change in each determinant necessary to increase aggregate demand.
Change Needed to Increase AD
Wealth
Taxes
Expected rate of return on investment
Incomes in other countries
PRICE LEVEL

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