What happens to aggregate demand if the demand for consumption goods decreases? If the demand for investment goods increases?
If the demand for consumption goods decreases, this will cause a decrease in aggregate demand, and will shift the aggregate demand curve to the left. If the demand for investment goods increased, this would have the effect of shifting the aggregate demand curve to the right resulting in an increased level of GDP.
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Place point X on the graph to indicate full employment, point Y to indicate economic growth and point Z to indicate a bad depression.
Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
At the equilibrium price, deadweight loss is minimized
a. True b. False Indicate whether the statement is true or false
When a tax of $1.00 per gallon is imposed on sellers of gasoline, the supply curve for gasoline shifts upward, but by less than $1.00
a. True b. False Indicate whether the statement is true or false