00:01
So what is aggregate demand? let's draw the aggregate demand curve first, right? aggregate demand is a story about how much people are willing to spend at any price level.
00:13
How much spending as prices change, right? so as prices go down, people are willing to spend more.
00:23
And depending on the macroeconomics courses you're taking, the explanation for that might be more or less sophisticated.
00:31
But we want to think about something that increases purchasing power, right? so a is going to be higher taxes.
00:39
Higher taxes is not going to be the right answer, right? this is going to result in less spending.
00:44
People will have less money available.
00:47
There will be less money to spend, right? an increase in exports, right? b is increase in exports.
01:01
Exactly, right? there is now more demand for our goods.
01:09
Absolutely, right? if people suddenly love the goods that our country is providing, that means that at every single price level, there will be more demand, and you will get this shift of aggregate demand to the right.
01:24
C is falling prices...