The TE curve shifts upward, the AD curve shifts upward, and Real GDP rises if households as a group experience a gain in wealth at a particular price level.
The Keynesian viewpoint emphasizes total demand. The concept is straightforward: businesses only produce stuff if they anticipate selling it. Thus, a country's potential GDP is determined by the availability of the factors of production, whereas the number of goods and services actually produced and sold, or real GDP, depends on the level of demand across the economy. Let's say GDP falls short of potential. Changes in aggregate demand then directly affect GDP without affecting the level of prices. Real GDP is calculated, in essence.
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