Aggregate Demand - shifts of the aggregate demand curve - changes in expectations
3 important questions on Aggregate Demand - shifts of the aggregate demand curve - changes in expectations
Consumer spending and and planned investment both depend on two factors?
- Changes in expectiaitons
- changes in expectation about future income (consumers)
- changes in expectations about real GDP, and interest rate. (investment)
When do expectations push both planned investment and consumer spending up or down?
- if both consumers and firms are more optimistic then aggregate expenditure rises
- if both consumers and firms are more pessimistic then aggregate expenditure falls
Due to what does aggerate expenditure fall?
The aggregate expenditure falls due to autonomous spending.
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