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Aggregate demand curve.
The aggregate demand curve shifts to the right
aggregate demand curve is the total sum of all the individual demand curves while individual demand curve is the demand made by the single individual.
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
b
Aggregate demand curve.
The aggregate demand curve shifts to the right
The aggregate demand curve shifts to the right
aggregate demand curve is the total sum of all the individual demand curves while individual demand curve is the demand made by the single individual.
The aggregate demand curve show what consumers are willing to buy at a given price level, whereas the aggregate supply curve shows what producers are willing to produce at a given price level.
b
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
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.
Left
right
An increase in interest rates decreases the aggregate demand shifting the curve to the left.
The aggregate demand curve will shift to the right as the economy expands. When that happens, the quantity of output demanded for a given price level rises.