ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Consumption
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Investment
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Government expenditure
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All of the above are correct
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Detailed explanation-1: -ANS: The increase in expenditures means that government spending rises. The aggregate demand curve shifts to the right.
Detailed explanation-2: -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-3: -A rightward shift in the AD curve occurs when there happens an increase in the consumption expenditure, investment expenditure, government spending, and net exports.
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.
Detailed explanation-5: -Which factor would shift the Aggregate Demand curve to the right? a fall in interest rates which increases investment.