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The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD, to AD2,

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The following graph shows an increase in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the right from AD, to AD2, causing the quantity of output demanded to rise at all price levels. For example, at a price level of 140, output is now $400 billion, where previously it was $300 billion. 170 180 150 140 130 PRICE LEVEL 120 AD 2 110 AD 100 100 200 300 400 500 600 700 800 OUTPUT (Billions of dollars)

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