ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Factors that Cause Shifts in Aggregate Demand An increase in any of the components of aggregate demand – consumption spending, investment spending, government spending, and net exports (X-M) – shifts the aggregate demand curve to the right, and a fall in any of these components shifts it to the left.

Detailed explanation-2: -A change in any factor that influences spending plans other than the price level will cause a change in aggregate demand. The primary variables that can shift the aggregate demand curve include interest rates, expectations, and other familiar demand shifters.

Detailed explanation-3: –A decrease in government purchases or an increase in taxes shifts the aggregate demand curve to the left.

Detailed explanation-4: -Answer and Explanation: A change in the interest rate does not cause a shift in the demand curve for money.