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aggregate demand curve

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Describe how the following events change the aggregate demand curve:
a. a decrease in money demand caused by the introduction of a new electronic money card
b. a decrease in the money supply
c. an increase in the price level
d. an increase in government taxes

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Solution Preview

a. a decrease in money demand caused by the introduction of a new electronic money card
The introduction of a new electronic money card will not change the M1 supply and, therefore, the money demand is reduced.

This will put a downward pressure on interest rate and discourage savings. So more money will be ...

Solution Summary

This job shows how aggregate demand curves shift.

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