How do changes in expectations, fiscal policy and monetary policy, and the world economy change aggregate demand and the aggregate demand curve?
What will be an ideal response?
Aggregate demand increases and the AD curve shifts rightward if: expected future income, expected future inflation, or expected future profits increase; government expenditure increases or taxes are cut; the quantity of money increases and the interest rate is cut; the exchange rate falls; or foreigners' income increases. The reverse changes decrease aggregate demand and shift the AD curve leftward.
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An efficient economy would set the marginal product in the traditional sector
A) lower than that in the modern non-traditional sector. B) higher than that in the modern sophisticated sector. C) equal to that in the modern sophisticated sector. D) lower in the relatively capital intensive sector. E) higher in the relatively capital intensive sector.
The OPEC crisis caused the aggregate demand curve to shift to the left
Indicate whether the statement is true or false