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Key Concept: Aggregate demand curve Which of the following could not be expected to shift the aggregate demand curve? a. Net exports fall b. Consumption spending decreases c. An increase in government spending d. A change in real GDP.
Economics For Today
Economics For Today
Key Concept: Aggregate demand curve
Which of the following could not be expected to shift the aggregate demand curve?
- a. Net exports fall
- b. Consumption spending decreases
- c. An increase in government spending
- d. A change in real GDP.
The reason that will not cause the shift in the aggregate demand curve.
Explanation of Solution
The economic growth is the increase in the inflation adjusted market value of goods and services in the economy over the time period. The aggregate demand is the summation of consumption demand, investment demand, government, and net exports. Thus, the summation of total demand from all economic agents is known as the aggregate demand.
Option (d):
The aggregate demand curve will not shift when there is a change in the real GDP of the economy because the real GDP is not the component of the aggregate demand curve. Hence, option 'd' is correct.
Option (a):
When the net exports fall, the imports increase in the economy than the exports. As more imports happen in the economy, the aggregate demand curve of the economy would shift toward the left...
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