ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The aggregate demand curve, or AD curve, shifts to the right as the components of aggregate demand-consumption spending, investment spending, government spending, and spending on exports minus imports-rise. The AD curve will shift back to the left as these components fall.

Detailed explanation-2: -The aggregate demand curve tends to shift to the left when total consumer spending declines. 2 Consumers might spend less because the cost of living is rising or because government taxes have increased. Consumers may decide to spend less and save more if they expect prices to rise in the future.

Detailed explanation-3: -The same effect is felt when the government increases its spending on something like healthcare. On the other hand, when the government increases taxes or reduces expenditure, consumer wealth decreases, which contracts the real GDP and shifts the aggregate demand curve to the left to AD1.

Detailed explanation-4: -The answer is A. When the general price level change, then the economy moves to the different points on the same aggregate demand curve. Therefore, the fluctuations in the price level will not cause any shift in the aggregate demand curve.

Detailed explanation-5: -Optimism about the future will increase the aggregate demand and its curve will shift towards the right. All the other options will shift the curve to the left.