Macroeconomics 03.01 Aggregate Demand (AD)

Consumer confidence began to decline, causing a decrease in autonomous consumption spending, ceteris paribus. Ceteris paribus, which shift on the above graph could illustrate this change in the economy?

From AD2 to AD1

Which of the following would explain a shift from AD2 to AD3?

Imports decrease while exports increase.

The aggregate demand model dictates that given a price level increase in an economy

the aggregate quantity demanded of goods and services will decrease

A change in the price level increases the costs of new loans, decreasing the quantity of private business investment. This is known as

the interest rate effect

When the overall price level increases, it decreases the value of domestic consumers' assets, known as __________, and also decreases the purchasing power of consumers from other countries, which is known as _________

the real wealth effect; the foreign trade effect