Why does the aggregate demand (AD) curve slope downward? What could cause the AD curve to shift to the right? What impact would a rightward shift of the AD curve have on the economy?
What will be an ideal response?
The AD curve slopes downward because of the real balances (wealth) effect, the interest-rate effect and the net exports effect. Anything that increases total spending in the national economy would shift the aggregate demand curve to the right and increase real GDP and the price level (creating demand-pull inflation).
Economics
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