Briefly explain whether each of the following shifts the aggregate demand curve to the right or...

Briefly explain whether each of the following shifts the aggregate demand curve to the right or to the left. Briefly explain your responses

The Federal Reserve sells $10 billion of US Treasury securities.
The federal government launches a massive program to rebuild the country’s highways.
The dollar appreciates relative to the currencies of its major trading partners.

Expert Solution

a. Federal Reserve sells $10 billion of US treasury securities

In this case, the demand will be decrease and will go right, as there will be less supply of money. When the bank sold the securities, the money from the market goes into the hands of the reserves. In some of the cases, the reserve do this in order to tackle inflation and with high liquiditiy.

b. The federal government launches a massive program to rebuild the country's highways.

IN this case, the demand will increase and will go left, as there will be increase the efficient movement of goods and logistics. Which will directly increase the demand.

c. The dollar appreciates relative to the currencies of its major trading partners.

In this case, the demand will decrease and will go right, as the cost of the goods will increase in case of import. And the trading countires will incurr high cost and will decrease the demand of the goods.

ekkarill92 answered 1 year ago

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