Macroeconomics › Section K · The aggregate demand and aggregate supply model › Topic K.4
Shifts in aggregate demand
Confidence, taxes, government budgets, interest rates and foreign demand can all change how much an economy spends at every price level. This topic catalogues what shifts the aggregate demand curve and shows why the same shift can bring mostly jobs in one economy and mostly higher prices in another.
In this topic
- What an AD shift means
- Why imports are subtracted
- Confidence and expectations
- Wealth, foreign incomes and exchange rates
- Fiscal policy: spending and taxes
- Monetary policy: interest rates
- Worked example: a slump in confidence
- The slope of SRAS decides the outcome
- Worked example: the same tax cut at two moments
- Common mistakes to avoid
- Key takeaways
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