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Explain What Will Happen to the Aggregate Demand Curve and Real

question 184

Essay

Explain what will happen to the aggregate demand curve and real GDP in each of the following cases.
(A)Foreign preference for U.S.goods increases.
(B)The marginal propensity to save increases.
(C)The Fed lowers the target inflation rate.
(D)Taxes increase.
(E)World interest rates rise relative to domestic interest rates.

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Definitions:

Stall Test

A test performed on vehicles with automatic transmissions to verify the performance of the engine and transmission, usually to determine if one is at fault.

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A system of gears consisting of one or more outer gears (planet gears) revolving around a central (sun) gear, commonly used in automatic transmissions for gear ratio changes.

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