Explain for each event whether it changes the quantity of real GDP demanded or aggregate demand in the United States
What will be an ideal response?
• U.S exports to the European Union boom.
The increase in U.S. exports increases U.S. aggregate demand.
• U.S. firms build new gas-fuel utilities.
Building new plants in the United States increases U.S. aggregate supply, which brings a change in the quantity of real GDP demanded. Building the new plants also increases investment, which increases aggregate demand.
• U.S. inflation rate is expected to rise next year.
The increase in the expected inflation rate increases aggregate demand.
• The U.S. price level rises.
The rise in the U.S. price level leads to a change in the quantity of real GDP demanded.
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