Discuss the difference between an increase in the aggregate demand curve and an increase in the quantity of real GDP demanded. Include a discussion of how the price level relates to each event
An increase in aggregate demand is depicted as a shift of the entire curve to the right. Such a shift could be caused by any factor other than the overall price level that has a positive impact on spending. Examples include lower personal taxes, lower interest rates, and increased government spending. Ceteris paribus, the result of an increase in aggregate demand is an increase in the price level. In contrast, an increase in the quantity of real GDP demanded is depicted as movement along the existing aggregate demand curve. The only factor that would cause this movement is a decrease in the overall price level.
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