There is an increasing trend of globalization in the world, part of which is

manifested in credit and input markets. It could be argued that this will cause interest rates to be determined in international credit markets rather than in national credit markets, and most small, national
fluctuations will have no effect. How might this change the relationship
between the aggregate quantity of goods and services demanded and the
price level in a nation's economy? That is, In terms of the AD/AS diagram,
will the AD curve become steeper or flatter?

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As globalization increases, credit and input markets become more interconnected across nations. This can potentially lead to the determination of interest rates in international credit markets rather than in national credit markets. In this scenario, small fluctuations in national credit markets may have little effect on interest rates.

Regarding the relationship between the aggregate quantity of goods and services demanded and the price level in a nation's economy, the impact of globalization on interest rates can influence the aggregate demand (AD) curve in the AD/AS diagram.

Typically, the AD curve shows the relationship between the price level and the aggregate quantity of goods and services demanded in a nation's economy, assuming other factors remain constant. When interest rates are determined in international credit markets, the cost of borrowing and investing can be influenced by global factors such as capital flows, exchange rates, and investor preferences.

If interest rates are determined globally, fluctuations in national interest rates may have a diminished impact on investment and borrowing decisions, which are key components of aggregate demand. This could lead to a more stable AD curve and potentially a flatter AD curve.

A flatter AD curve means that changes in the price level will have a smaller impact on the quantity of goods and services demanded. This could indicate that changes in price levels will have a lesser effect on the overall demand for goods and services in the economy, regardless of national credit market fluctuations.

It is important to note that the impact of globalization on interest rates and the AD curve will depend on various economic factors, policies, and the degree of integration in credit and input markets. Therefore, an empirical analysis would be necessary to assess the specific effects in a given economy.