Determinants of aggregate demand 3. Determinants of aggregate demandThe following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left fromAD₁ to AD₂, causing the quantity of output demanded to fall at all price levels. For example, at a price level of 140, output is now $200 billion, wherepreviously it was $300 billion.170PRICE LEVEL1601501401303120110#10090080F310014I$111TI200 300 400 500OUTPUT (Billions of dollars)QF4%5ļF5TAD₁AD2600700A6800MacBook AirF6>&7F7(?* 008DIIFB(9F90)0F10-3PdF11+=F120xbangeCAA+A-ZLdelete DF2PRICE LE130120711010090#3WE0The following table lists several determinants of aggregate demand.Complete the table by indicating the change in each determinant necessary to decrease aggregate demand.Change Needed to Decrease ADmD100WealthTaxesInterest ratesThe value of the domestic currency relative to the foreign currency80F3I200 300 400 500 600OUTPUT (Billions of dollars)$4RFQF4%5AD₁1AD₂&F5T700 800GA6MacBook AirF6YH&7«F7UJ*8DIIFB(9DDF9D1KO-OLF103PF11:{+ 11[=11F12}1(1bangeAA-Zdeletereturn

Aggregate demand shows the negative relationship between the quantity of final goods demanded and…

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Business

Economics

Determinants of aggregate demand

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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