The following graph shows an increase in aggregate demand in a hypothetical country. Specifically, aggregate demand shifts to the right from AD₁ to AD2₂, 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. PRICE LEVEL 170 160 150 140 120 110 100 90 0 100 AD2 200 300 400 500 OUTPUT (Billions of dollars) AD₁ 600 700 800 ?

The following graph shows an increase in aggregate demand in a hypothetical country. Specifically, aggregate demand shifts to the right from AD₁ to AD2₂, 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. PRICE LEVEL 170 160 150 140 120 110 100 90 0 100 AD2 200 300 400 500 OUTPUT (Billions of dollars) AD₁ 600 700 800 ?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter25: The Keynesian Perspective

Section: Chapter Questions

Problem 20CTQ: Suppose the economy is operating at potential GDP when It experiences an increase in export demand....

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