ECONOMICS (CBSE/UGC NET)

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

Detailed explanation-2: -Just like in an aggregate supply curve, the horizontal axis shows real GDP and the vertical axis shows price level. But there’s a big difference in the shape of the AD curve-it slopes down. This downward slope indicates that increases in the price level of outputs lead to a lower quantity of total spending.

Detailed explanation-3: -An increase in the value of the stock market would make individuals feel wealthier and thus more confident about their economic situation. This would likely cause an increase in consumer confidence leading to an increase in consumer spending, shifting the AD curve to the right.

Detailed explanation-4: -The aggregate supply curve shifts to the right as productivity increases or the price of key inputs falls, making a combination of lower inflation, higher output, and lower unemployment possible.

Detailed explanation-5: -An increase in the marginal propensity to consume creates a steeper aggregate demand curve. The point of origin is the same, but steeper line crosses the equilibrium line at a higher point. This results in larger equilibrium values for aggregate demand and national income.