Essay
What effect will the following have on the aggregate demand curve? Choose from a rightward shift, a leftward shift or a movement along.
(i) The government increases the money supply.
(ii) The government increases taxes.
(iii) The government increases its spending.
(iv) People anticipate a rise in the rate of inflation.
(v) Higher prices lead to higher interest rates.
(vi) The government reduces interest rates.
(vii) Higher UK prices lead to a fall in the exchange rate.
(viii) A reduction in prices abroad leads to a fall in the demand for UK exports.
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(i) There will be a rightward shift in a...View Answer
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