Review: Aggregate Demand

The government increases spending on infrastructure projects.

• AD increases

• AD decreases

• No change in AD

• AD shifts right

• AD shifts left

A general decrease in the price level occurs in the economy

• AD increases

• AD decreases

• No change in AD

• AD shifts right

• AD shifts left

Businesses increase investment due to optimism about future profitability

• AD increases

• AD decreases

• No change in AD

• AD shifts right

• AD shifts left

A reduction in interest rates leads to cheaper borrowing

• AD increases

• AD decreases

• No change in AD

• AD shifts right

• AD shifts left

The price level increases due to inflation

• AD increases

• AD decreases

• No change in AD

• AD shifts right

• AD shifts left

A fall in consumer confidence causes households to save more and spend less

• AD increases

• AD decreases

• No change in AD

• AD shifts right

• AD shifts left

Exports from the country increase due to a depreciation in the currency

• AD increases

• AD decreases

• No change in AD

• AD shifts right

• AD shifts left

A higher domestic price level makes foreign goods relatively cheaper, leading to increased imports

• AD increases

• AD decreases

• No change in AD

• AD shifts right

• AD shifts left

Consumers expect a recession and reduce spending on big-ticket items

• AD increases

• AD decreases

• No change in AD

• AD shifts right

• AD shifts left

A surge in foreign demand for domestic goods due to a global recovery

• AD increases

• AD decreases

• No change in AD

• AD shifts right

• AD shifts left