ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -In the most general sense (and assuming ceteris paribus conditions), an increase in aggregate demand corresponds with an increase in the price level; conversely, a decrease in aggregate demand corresponds with a lower price level.

Detailed explanation-3: -The aggregate supply curve will shift out to the right as productivity increases. It will shift back to the left as the price of key inputs rises, and will shift out to the right if the price of key inputs falls.

Detailed explanation-4: -The curve shifts to the right if the determinant causes demand to increase. This means more of the good or service are demanded even though there’s no change in price. When the economy is booming, buyers’ incomes will rise. They’ll buy more of everything, even though the price hasn’t changed.

Detailed explanation-5: -The AD curve shifts rightward if taxes decrease. If a change in investment spending is due to a change in the price level, then the aggregate demand curve will shift.