Concept explainers
Concept Introduction:
Aggregate
Shift in Aggregate Demand Curve: There are several factors on which the shifting of demand curve depends. Some of them are:
- Changes in expectation: when consumers are more confident about future then AD curve shifts in the right direction and vice versa.
- Changes in wealth: when the wealth of an individual increases that means real value of assets increases then the AD curve shifts in right direction and when it decreases then it shifts leftward.
- Size of stock of physical capital: when the size of stock is small then AD curve shifts rightward and vice versa.
- Fiscal policy: It includes government expenditure and taxes. When government expenditure is increased or taxes are decreased then Ad curve shifts rightward and vice versa.
Monetary policy: It includes money supply changes. When money supply increases Ad curve shifts rightward and vice versa.
Short Run
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Chapter 16 Solutions
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