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Unformatted text preview: exports. On the contrary under such conditions imported goods become relatively dearer, the demand for which declines and this results in a rise in demand for indigenous products. When all these factors are moving in the opposite direction, they will result in a fall in the aggregate demand and rightward shift in the AD curve. In figure 11, DD is the original demand curve. On this demand curve at a given price level P 1 aggregate demand is of the size q 1 . But when the demand curve shifts rightward or upward, as D 1 D 1 then at the same price level P 1 demand increases from q 1 to q 2 . This means that there has been an increase in demand at the same price. If we consider the higher demand curve D 1 D 1 to be the initial demand curve, then the demand curve DD denotes leftward or downward shift. This time it means that at the same price there has been a decrease in demand....
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This note was uploaded on 11/17/2011 for the course EC ec 201 taught by Professor - during the Fall '10 term at Montgomery.
- Fall '10