Long description

The figure is a screenshot of the Aggregate Demand Interactive chart.

It shows the answer to Activity 8 question (c). Above the chart, it says that this is for a closed economy without government.

Aggregate Demand in millions of £ (£m) is shown on the vertical axis, starting at 0 up to 2000, at intervals of 100. Income in £m is on the horizontal axis, starting at 0 and rising to 2000 at intervals of 100.

The 45 degree line is shown in brown. The Aggregate Demand function is shown in red. The full employment equilibrium level is shown at a level of income of £800m. A vertical full employment income line in purple is drawn from this point to intersect the 45 degree line. The legend on the right of the chart shows the colour coding for the lines and tells us that full employment income is denoted as Yf.

The AD line intersects the 45 degree line at an income level Y of £800m, which equals the full employment level of income Yf.