ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If Investment increases, then ceteris paribus, AD will increase. The increase in aggregate demand will lead to higher economic growth and possibly inflation.

Detailed explanation-2: -The text notes that rising investment shifts the aggregate demand curve to the right and at the same time shifts the long-run aggregate supply curve to the right by increasing the nation’s stock of physical and human capital.

Detailed explanation-3: -Government spending. An increase in government spending causes the AD curve to shift to the right, whereas a decrease in government spending causes the AD curve to shift to the left. Again, any factor that affects government spending will also impact the AD curve.

Detailed explanation-4: -Aggregate demand increases when the components of aggregate demand–including consumption spending, investment spending, government spending, and spending on exports minus imports–rise.