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What increase aggregate demand?

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Anonymous

7y ago
Updated: 9/1/2021

Anything -other than the desired (product/service)'s price- that would change the demand for a product/service would increase aggregate demand. Some examples may be: increased incomes, increased population, increased price of substitute products, etc..

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Eliseo Keebler

Lvl 10
4y ago

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Why doesn't an increase in aggregate demand translate directly into an increase in real GDP?

Why doesn't an increase in aggregate demand translate directly into an increase in real GDP


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Demand-pull is caused by an increase in aggregate demand.


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What will happen if Aggregate demand increases and aggregate supply increases?

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An increase in taxes shifts the aggregate demand curve to the?

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Using the AD-AS framework what is the impact on equilibrium price and output when there are increase in aggregate demand and aggregate supply simultaneously?

AD-AS represents aggregate demand curve (AD) and aggregate supply curve (AS). "In the aggregate demand-aggregate supply model, each point on the aggregate demand curve is an outcome of the IS-LM model for aggregate demand Y based on a particular price level. Starting from one point on the aggregate demand curve, at a particular price level and a quantity of aggregate demand implied by the IS-LM model for that price level, if one considers a higher potential price level, in the IS-LM model the real money supply M/P will be lower and hence the LM curve will be shifted higher, leading to lower aggregate demand; hence at the higher price level the level of aggregate demand is lower, so the aggregate demand curve is negatively sloped


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