7. Fiscal policy, the money market, and aggregate demand

Consider a hypothetical economy in which households spend $0.50 of each additional dollar they earn and save the remaining $0.50. The following graph shows the economy's initial aggregate demand curve (AD1).

Use the green line (triangle symbol) on the following graph to show the aggregate demand curve (AD2) after the multiplier effect takes place.

Hint: Be sure the new aggregate demand curve (AD2) is parallel to AD1. You can see the slope of AD1by selecting it on the following graph.