Determinants of aggregate demandThe following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD1AD1 to AD2AD2, 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. 170160150140130AD2120AD,11010090100200300400500600700800OUTPUT (Billions of dollars)The following table lists several determinants of aggregate demand.Complete the table by indicating the change in each determinant necessary to increase aggregate demand.Change Needed to Increase ADWealthTaxesExpected rate of return on investmentIncomes in other countriesPRICE LEVEL

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170 160 150 140 130 AD2 120 AD, 110 100 90 100 200 300 400 500 600 700 800 OUTPUT (Billions of dollars) The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to increase aggregate demand. Change Needed to Increase AD Wealth Taxes Expected rate of return on investment Incomes in other countries PRICE LEVEL

170 160 150 140 130 AD2 120 AD, 110 100 90 100 200 300 400 500 600 700 800 OUTPUT (Billions of dollars) The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to increase aggregate demand. Change Needed to Increase AD Wealth Taxes Expected rate of return on investment Incomes in other countries PRICE LEVEL

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance

Section: Chapter Questions

Problem 1.1P

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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 AD1AD1 to AD2AD2, 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.

170
160
150
140
130
AD2
120
AD,
110
100
90
100
200
300
400
500
600
700
800
OUTPUT (Billions of dollars)
The following table lists several determinants of aggregate demand.
Complete the table by indicating the change in each determinant necessary to increase aggregate demand.
Change Needed to Increase AD
Wealth
Taxes
Expected rate of return on investment
Incomes in other countries
PRICE LEVEL

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