Reference no: EM131091991
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 AD1 to AD2, 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.
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:
Consumer expectations (Improve/Worsen)
Consumer expectations (Increase/decrease)
Expected rate of return on investment (Increase/decrease)
Incomes in other countries (Increase/decrease)
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