An increase in aggregate demand and a decrease in aggregate supply will result in a shortage: there will be more goods and services demanded than that which is being produced.
When aggregate demand and aggregate supply both decrease, the result is no change to price. As price increases, aggregate demand decreases, and aggregate supply increases.
The equilibrium price level increases, but the real GDP change depends on how much aggregate demand and aggregate supply change by.
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No effect. Spending will decrease Aggregate Demand, lower taxes will raise Aggregate Demand
The interest rate does affect aggregate demand. As the interest rate falls, aggregate demand increases and vice-versa.
When aggregate demand and aggregate supply both decrease, the result is no change to price. As price increases, aggregate demand decreases, and aggregate supply increases.
The equilibrium price level increases, but the real GDP change depends on how much aggregate demand and aggregate supply change by.
The equilibrium price level increases, but the real GDP change depends on how much aggregate demand and aggregate supply change by.
The equilibrium price level increases, but the real GDP change depends on how much aggregate demand and aggregate supply change by.
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No effect. Spending will decrease Aggregate Demand, lower taxes will raise Aggregate Demand
An increase in aggregate demand and a decrease in aggregate supply will result in a shortage: there will be more goods and services demanded than that which is being produced.
The interest rate does affect aggregate demand. As the interest rate falls, aggregate demand increases and vice-versa.
it increases
An increase in interest rates decreases the aggregate demand shifting the curve to the left.
When aggregate demand increases, GDP typically rises as businesses respond to higher consumer spending by producing more goods and services. Conversely, if aggregate supply increases, GDP can also rise, leading to economic growth without necessarily causing inflation. However, if aggregate demand decreases while aggregate supply remains unchanged, GDP will likely fall, indicating a contraction in economic activity. Overall, changes in either aggregate supply or demand can significantly impact GDP, influencing economic performance and stability.
When both aggregate demand and aggregate supply increase, the overall effect on the economy depends on the relative magnitudes of the shifts. If aggregate demand increases more than aggregate supply, it can lead to higher prices (inflation) and potential economic growth. Conversely, if aggregate supply increases more than demand, it can result in lower prices and increased output, potentially stimulating economic growth without inflation. In the ideal scenario where both increase proportionately, the economy may experience stable growth with little change in price levels.