ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Deforestation of the Amazon
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The Stock Market
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inflation, recessions and employment
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Donald Trump’s Tax returns
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Detailed explanation-1: -The aggregate demand/aggregate supply model is a model that shows what determines total supply or total demand for the economy and how total demand and total supply interact at the macroeconomic level. Aggregate supply is the total quantity of output firms will produce and sell-in other words, the real GDP.
Detailed explanation-2: -A reduction in aggregate demand causes a leftward shift in the aggregate demand curve. This reduction lowers the GDP and price levels. This leads to economic contractions, making demand fall below the economy’s potential GDP, thereby causing a recession. Real GDP then falls, and so does the aggregate price level.
Detailed explanation-3: -Most economists use the model of aggregate demand and aggregate supply to analyze short-run economic fluctuations.
Detailed explanation-4: -When economists study aggregate supply and aggregate demand, what are they studying? The supply and demand of a good produced by one company. The total supply and demand of goods produced at all price levels. The equilibrium price of one good that is produced.