3.2.2.3 and 4.2.2.3 The determinants of aggregate demand

An increase in labour productivity causes household incomes to rise.

• AD2 - Shift right

• AD3 - Shift left

• AD1 - No Shift

• Movement along AD1

Per capita incomes abroad grow more rapidly than incomes at home:

• AD2 - Shift Right

• AD3 - Shift Left

• AD1 - No Shift

• Movement along AD1

Lower energy costs cause the price level of domestically produced goods and services to fall.

• Movement Along AD1

• AD2 - Shift Right

• AD1 - No Shift

• AD3 - Shift left

Government cuts income tax rates on households.

• AD2 - Shift Right

• AD3 - Shift left

• AD1 - No Shift

• Movement Along AD1

A war makes oil more scarce and causes firm to raise the prices they charge for their goods

• Movement Along AD1

• AD2 - Shift Right

• AD1 - No Shift

• AD3 - Shift left

A stock market bubble bursts and share prices tumble.

• AD3 - Shift left

• AD2 - Shift Right

• AD1 - No Shift

• Movement Along AD1

Unexpectedly high inflation reduces the real interest rate on savings and loans.

• AD2 - Shift Right

• AD3 - Shift left

• AD1 - No Shift

• Movement Along AD1

Government, in an effort to balance its budget, reduces spending on infrastructure repairs.

• AD3 - Shift left

• AD2 - Shift Right

• AD1 - No Shift

• Movement Along AD1

A nation's currency appreciates against the currencies of trading partners.

• AD3 - Shift left

• AD2 - Shift Right

• AD1 - No Shift

• Movement Along AD1

The government issues new bonds to be able to spend more this year than it collected in taxes.

• AD2 - Shift Right

• AD3 - Shift left

• AD1 - No Shift

• Movement Along AD1