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Suppose that the election of a popular presidential candidate suddenly increases people’s confidence in the future. Use the model of aggregate demand and aggregate supply to analyze the effect on the economy

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Answer:

The aggregate demand will increase.

Step-by-step explanation:

The increase in people’s confidence that the future return will be good or higher then the people will increase their current spending. Thus, an increase in the current spending will result in the rise of aggregate demand. consequently, the aggregate demand curve will shift rightwards, and this forms a new equilibrium at a higher position. Resulting in increased price and increased quantity. Thus, in future, people will see faster economic growth.

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