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Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040

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BuyFindarrow_forward

Economics For Today

10th Edition
Tucker
Publisher: Cengage Learning
ISBN: 9781337613040
Chapter P6, Problem 4KC
Textbook Problem
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Key Concept: Aggregate demand curve

Which of the following could not be expected to shift the aggregate demand curve?

  1. a. Net exports fall
  2. b. Consumption spending decreases
  3. c. An increase in government spending
  4. d. A change in real GDP.

To determine

 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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