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I am unable to figure this out. The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price

I am unable to figure this out.

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The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 140, and the quantity of output demanded is $300 billion. Moving down along the aggregate demand curve from point A to point B, the price level falls to 120, and the quantity of output demanded rises to $500 billion. 170 160 150 A 140 130 PRICE LEVEL B 120 110 AD 100 90 0 100 200 300 400 500 600 700 800OUTPUT (Billions of dollars) As the price level falls, the purchasing power of households' real wealth will V , causing the quantity of output demanded to V . This phenomenon is known as the V effect. Additionally, as the price level falls. the impact on the domestic interest rate will cause the real value of the dollar to V in foreign exchange markets. The number of domestic products purchased by foreigners (exports) will therefore V , and the number of foreign products purchased by domestic consumers and rms (imports) will V . Net exports will therefore V :- causing the quantity.r of domesc output demanded to V . This phenomenon is known as the V effect. Co ntinue without saving

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