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1. Determinants of aggregate demand The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1 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, where previously it was $300 billion. changes need to increase AD: Wealth (increase or decrease) Taxes (increase or decrease) Interest Rates (increase or decrease) The Value of the Domestic Currency Relative to the Foreign Currency (depreciate or appreciate).

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1. Determinants of aggregate demand The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1 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, where previously it was $300 billion. changes need to increase AD: Wealth (increase or decrease) Taxes (increase or decrease) Interest Rates (increase or decrease) The Value of the Domestic Currency Relative to the Foreign Currency (depreciate or appreciate)

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1 Determinants of aggregate demand The following graph show.pdf

  • 1. 1. Determinants of aggregate demand The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1 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, where previously it was $300 billion. changes need to increase AD: Wealth (increase or decrease) Taxes (increase or decrease) Interest Rates (increase or decrease) The Value of the Domestic Currency Relative to the Foreign Currency (depreciate or appreciate)