4. Determinants of aggregate demand The graph below is associated with a hypothetical country. Consider an increase in aggregate demand (AD). Specifically, aggregate demand shifts to the right from AD₁ to AD2, causing the quantity of output demanded to rise at each price level. For instance, at a price level of 140, output is now $400 billion, where initially it was $300 billion. PRICE LEVEL 170 160 150 140 130 120 110 100 90 +--+ 1 1 1 AD2 AD₁

ENGR.ECONOMIC ANALYSIS
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Author:NEWNAN
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Chapter1: Making Economics Decisions
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Question
110
100
90
0
100
300 400
500
OUTPUT (Billions of dollars)
200
AD1
600
700
800
The following table lists several determinants of aggregate demand.
Fill in the missing values in the table by selecting the change in each scenario required to increase aggregate demand.
Change Required to Increase AD
Interest rates
Domestic currency value relative to the foreign currency
Wealth
Taxes
Transcribed Image Text:110 100 90 0 100 300 400 500 OUTPUT (Billions of dollars) 200 AD1 600 700 800 The following table lists several determinants of aggregate demand. Fill in the missing values in the table by selecting the change in each scenario required to increase aggregate demand. Change Required to Increase AD Interest rates Domestic currency value relative to the foreign currency Wealth Taxes
4. Determinants of aggregate demand
The graph below is associated with a hypothetical country. Consider an increase in aggregate demand (AD). Specifically, aggregate demand shifts to
the right from AD₁ to AD2, causing the quantity of output demanded to rise at each price level. For instance, at a price level of 140, output is now
$400 billion, where initially it was $300 billion.
PRICE LEVEL
170
160
150
140
130
120
110
100
90
AD
2
AD1
?
Transcribed Image Text:4. Determinants of aggregate demand The graph below is associated with a hypothetical country. Consider an increase in aggregate demand (AD). Specifically, aggregate demand shifts to the right from AD₁ to AD2, causing the quantity of output demanded to rise at each price level. For instance, at a price level of 140, output is now $400 billion, where initially it was $300 billion. PRICE LEVEL 170 160 150 140 130 120 110 100 90 AD 2 AD1 ?
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