Exhibit 20-5 Money, investment and product markets

In Exhibit 20-5, a shift in aggregate demand from AD₂ to AD₃:

Question

Exhibit 20-5 Money, investment and product markets In Exhibit 20-5, a shift in aggregate demand from AD₂ to AD₃:

Quizplus · Accepted Answer

A shift in aggregate demand from AD₂ to AD₃ would increase the quantity of output demanded (real GDP) and increase the price level. This is because a shift to the right in the aggregate demand curve indicates that consumers, businesses, and the government are collectively demanding more goods and services at every price level. As a result, producers will respond by increasing output, which will lead to higher prices as firms try to keep up with demand.

Exhibit 20-5 Money, Investment and Product Markets