Shifting the Aggregate Demand Curve Flashcards Preview

Economics > Shifting the Aggregate Demand Curve > Flashcards

Flashcards in Shifting the Aggregate Demand Curve Deck (9)
Loading flashcards...
1
Q

three main ways to shift the curve

A
  • changes in income
  • changes in interest rates
  • changes in expectations (consumer confidence)
2
Q

changes in income

A
  • decrease in income causes curve to shift left

- increase in income shifts right

3
Q

changes in interest rates

A
  • if interest rate falls, curve shifts right

- if interest rate rises, curve shifts left

4
Q

changes in expectations

A
  • if consumers expect their financial situation will improve, curve will shift right
  • if they expect their financial situation to worsen, curve will shift left (downward)
5
Q

what would increase aggregate demand

A

increase in income

6
Q

NOT a determinant of AD

A

government taxes

7
Q

what do these determinants have the power to do

A

shift the ADC

8
Q

NOT impact AD of goods and services

A

decrease in government spending

9
Q

if the interest rate changed from 10% to 2%, what would happen to borrowing

A

increase in borrowing