The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD¡ to AD2, 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, wwhere previously it was $300 billion. 170 100 150 140 130 120 AD2 110 AD, 100 00 + 100 200 300 400 500 00 700 800 OUTPUT (Billions of dollars) The following table lists several determinants of aggregate demand. Complete the table by indicating the change needed in each determinant to increase aggregate demand. Change Needed to Increase AD Wealth Тахes Expected rate of return on investment Incomes in other countries PRICE LEVEL
The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD¡ to AD2, 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, wwhere previously it was $300 billion. 170 100 150 140 130 120 AD2 110 AD, 100 00 + 100 200 300 400 500 00 700 800 OUTPUT (Billions of dollars) The following table lists several determinants of aggregate demand. Complete the table by indicating the change needed in each determinant to increase aggregate demand. Change Needed to Increase AD Wealth Тахes Expected rate of return on investment Incomes in other countries PRICE LEVEL
Chapter8: Macroeconomic Equilibrium: Aggregate Demand And Supply
Section: Chapter Questions
Problem 11E
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