Question

The aggregate demand curve of a small country called tynika is drawn as ad1.the combination of current real gdp and aggregate price level is shown as point
a. part 1: assume that there is an increase in the aggregate price level. using the copy and/or double-drop line tools, illustrate the impact of this on aggregate demand by either drawing a new curve (label it ad2) or plotting a new point on ad1 (label it b). part 2: now suppose that the price level remains unchanged. in this case it is widely expected that in the near future consumer and investment spending will increase substantially. using the copy and/or double-drop line tools, illustrate the impact of such changes in expectations on aggregate demand by either drawing a new curve (label it ad3) or plotting a new point on ad1 (label it c)

Answer 1

the combination of current real gdp and aggregate price level is shown as point
a. part 1: assume that there is an increase in the aggregate price level. using the copy and/or double-drop line tools, illustrate the impact of this on aggregate demand by either drawing a new curve (label it ad2) or plotting a new point on ad1 (label it b). part 2: now suppose that the price level remains unchanged. in this case it is widely expected that in the near future consumer and investment spending will increase substantially. using the copy and/or double-drop line tools, illustrate the impact of such changes in expectations on aggregate demand by either drawing a new curve (label it ad3) or plotting a new point on ad1 (label it c)