ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Therefore, when aggregate demand shifts more than the initial spending changes, it shows the multiplier effect in the economy.

Detailed explanation-2: -An economy’s aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the: multiplier effect.

Detailed explanation-3: -The aggregate demand 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-4: -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-5: -An increase in the money supply, and increase in government purchases, and a cut in personal taxes all cause the aggregate demand curve to shift to the right.