Why Does Aggregate Demand Shift Outward by a Greater Amount

question 301

Essay

Why does aggregate demand shift outward by a greater amount than the initial increase in
spending?

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Definitions:

Available-for-sale Securities

Financial assets that are neither classified as held-for-trading nor held-to-maturity, which can be sold in the short-term for cash or held till maturity.

Trading Securities

Investments in debt or equity securities bought and held primarily for selling them in the short term to generate income on short-term price differences.

Unrealized Gain or Loss

Refers to the increase or decrease in the value of investments that a company holds but has not yet sold, which affects the financial statements only when realized.

Income Statement

A financial report that shows a company's revenues, expenses, and net income over a specific period, highlighting its operating performance.