Aggregate Demand and Aggregate Supply - Aggregate Demand - shifts of the aggregate demand curve
8 important questions on Aggregate Demand and Aggregate Supply - Aggregate Demand - shifts of the aggregate demand curve
What do we call when AD curve to shift to the left, and the quantity of aggregate output demanded to falls at any given price level. A special name
Adverse aggregate demand shift
Factors that sift aggregate demand curve to the right
consumer good expectations about future income (consumers)
government spending increases (govt)
Factors that sift aggregate demand curve to the left
decrease in money supply
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What are the factors that shift the aggregate demand curve? And what do the five factors set the in motion?
- Changes in expectations
- changes in wealth
- changes in size of existing stock of physical capital
- Fiscal policy
- monetary policy
the five factors set the multiplier in motion
What happens when consumers and firms become optimistic?
- When consumers and firms become optimistic
- Aggregate demand increases or shift to the right
What happens when consumers and firms become pessimistic?
- when consumers and firms become pessimistic
- Aggregate demand decreases, or shifts to the left
What happens when the real value of household assets or my wealth falls?
Aggregate demand decreases or shift to the left
What happens when the existing stock of capital is relatively large?
Aggregate demand decreases or shifts to the left
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