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Explain movements along the aggregate demand curve and shifts of the aggregate demand curve?
Wiki User
∙ 13y ago
Movements along the aggregate demand curve are caused by changes in price level - real wealth effect, interest rate effect and open economy effect.
If some non-price level determinant causes total spending to increase/decrease then the curve will shift to the right/left - consumption, investment, government expenditure, net exports.
Wiki User
∙ 13y ago
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Ceteris paribus the price level will fall when A The aggregate supply curve shifts to the left B The aggregate demand curve shifts to the left C The aggregate demand curve shifts to the right?
b
How would a rise in the business investment affect the aggregate demand curve?
The aggregate demand curve shifts to the right
An decrease in taxes shifts the aggregate demand curve to the?
right
What is aggregate shock?
In economics, the supply curve in the aggregate supply and demand model shifts drastically to the left due to an inadequacy of resources or because the demand overpowers the supply.
What happens to prices and output in short run when Short-run aggregate demand shifts left?
Prices rise, output rises
Ceteris paribus the price level will fall when A The aggregate supply curve shifts to the left B The aggregate demand curve shifts to the left C The aggregate demand curve shifts to the right?
b
How would a rise in business affect the aggregate demand curve?
The aggregate demand curve shifts to the right
How would a rise in the business investment affect the aggregate demand curve?
The aggregate demand curve shifts to the right
An increase in taxes shifts the aggregate demand curve to the?
Left
An decrease in taxes shifts the aggregate demand curve to the?
right
What is aggregate shock?
In economics, the supply curve in the aggregate supply and demand model shifts drastically to the left due to an inadequacy of resources or because the demand overpowers the supply.
What happens to prices and output in short run when Short-run aggregate demand shifts left?
Prices rise, output rises
What happens to the aggregate expenditures curve when autonomous expenditures fall?
Aggregate expenditures will shifts down by the decline in aggregate expenditures.
Define the term equilibrium Explain the changes in market equilibrium and effects to shifts in supply and demand?
madarchode machudda
Suppose that the government reduces taxes on imported consumer goods. Use the model of aggregate demand and aggregate supply to explain what would happen to the price level and the output level of the economy in the short run?
The model of aggregate demand and aggregate supply can be used to explain what would happen to the price level and output level of the economy in the short run if the government reduces taxes on imported consumer goods. This can be illustrated with a diagram. In the diagram, the aggregate demand (AD) curve is downward sloping and the aggregate supply (AS) curve is upward sloping. The equilibrium price level is determined by the intersection of the two curves. Initially, the equilibrium price level is P1 and the equilibrium output level is Y1. When the government reduces taxes on imported consumer goods, the aggregate demand curve shifts to the right. This shift is represented by the movement from AD1 to AD2 in the diagram. The new equilibrium price level is P2, which is lower than the original price level. The new equilibrium output level is Y2, which is higher than the original output level. In summary, the reduction in taxes on imported consumer goods leads to a decrease in the price level and an increase in the output level in the short run. This is due to an increase in aggregate demand.
The interest rate falls if Answer a money demand shifts left or money supply shifts right b either money demand or money supply shifts left c money demand shifts right or money supply shi?
a
What will happen to the equilibrim price level and real GDP if aggregate demand and aggregate supply both increase?
If aggregate demand increases at every price level than the demand curve shifts to the right. In the short-run the new equilibrium forms from an increase in willingness to spend, thus higher prices and higher real GDP or quantity of output. If short-run aggregate supply increases at every price level than the supply curve shifts to the right. From the short-run to the long-run the new equilibrium forms from an increase willingness to sell, thus prices reduce to original equilibrium and output increases further. Recap: Prices stay constant while real GDP or total quantity of output increases.
