ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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An increase in government spending
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An increase in net exports
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An investment increase
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All of the above are correct
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Detailed explanation-1: -Hence, an increase in net exports would result in an increase in the aggregate demand of the economy. As a result, the aggregate demand curve would also shift to the right. Thus, option D is the correct answer.
Detailed explanation-2: -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-3: -If households become more optimistic about their future incomes, the aggregate demand curve will shift to the right. when the price level falls, the real value of household wealth rises, and so will consumption.
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.