ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If the AD curve shifts to the left, then the equilibrium quantity of output and the price level will fall.

Detailed explanation-2: -A decrease in consumer confidence causes a decrease (leftward shift) of the aggregate demand curve. Other notable aggregate demand determinants include interest rates, federal deficit, inflationary expectations, and the money supply. Buyers’ preferences are an important determinant of market demand.

Detailed explanation-3: -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-4: -Increasing consumer confidence increases consumer spending. The aggregate demand curve shifts to the right, indicating an increase in demand for goods and services.

Detailed explanation-5: -If the AS curve shifts back to the left, the combination of lower output, higher unemployment, and higher inflation, called stagflation, occurs. If AS shifts out to the right, a combination of lower inflation, higher output, and lower unemployment is possible.