The graph shows an economy in macroeconomic equilibrium. Now, three things occur: The world economy goes into an expansion, domestic businesses expect future profits to rise, and the government increases its expenditure on goods and services as international tensions increase. On the graph, draw onenew curve that shows the combined effect of the three events. Label it. Draw a point at the new macroeconomic equilibrium. >>>Draw only the objects specified in thequestion. The graph displays an economy in macroeconomic equilibrium with the following elements:- A vertical line labeled "Potential GDP" at 2.0 trillion dollars of Real GDP (in 2012 dollars).- A downward-sloping line labeled "AD" (Aggregate Demand).- An upward-sloping line labeled "AS" (Aggregate Supply).- Axes showing "Price level (GDP price index, 2012=100)" on the vertical axis and "Real GDP (trillions of 2012 dollars)" on the horizontal axis.- An equilibrium point where AD and AS intersect, located slightly above the GDP price index of 110.Instructions:Due to three events—global economic expansion, increased domestic business expectations for future profits, and heightened government expenditure—the task is to create a new curve to demonstrate these effects.1. **Draw a New Curve:** Illustrate a new curve that encompasses the combined influence of the three events, and clearly label it. 2. **Mark New Equilibrium:** Indicate a point on the graph representing the new macroeconomic equilibrium, considering the shifts in aggregate demand and supply.*Note: Only add elements specified in the instructions.*

The aggregate demand is a sum of private investment demand, government expenditure, private consumption expenditure and the next exports. The aggregate demand is a sum of private investment demand, government expenditure, private consumption expenditure and the next exports. Hence if any of these indicators increase, the aggregate demand increases. If world economy goes into expansion => demand for domestic goods increase => exports increase => net exports increase => Aggregate demand increase domestic businesses expect future profits to rise => they will increase their investment => private investment demand increase => aggregate demand increase government increases its expenditure on goods and services => government expenditure increases => aggregate demand increases Hence we can say that all of these 3 factors leads to increase in the aggregate demand at every given price level. Hence the aggregate demand curve shifts to the right from AD to AD'. Hence the new equilibrium is achieved at the point B where the aggregate demand (AD') curve intersects to aggregate supply curve (AS).