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Aggregate demand curve - Coggle Diagram
Aggregate demand curve
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The AD Curve
The wealth effect
A rise in the price level will reduce the demand of goods and services. Consumer purchasing power will then fall
The international effect
A rise in the price level will reduce for net exports as exports will become less price competitive while imports will become more price competitive
The interest rate effect
A rise in the price level will increase demand for money to pay the higher price. This will increase the interest rate. A higher interest rate usually results in a reduction in consumption and investment.
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