Factors that Shift Aggregate Demand
•
The following factors will cause a shift in
aggregate demand
outward
(inward)
:
•
An increase
(decrease)
in real wealth.
•
A decrease
(increase)
in the real interest rate.
•
An increase in the optimism
(pessimism)
of businesses and consumers about future
economic conditions.
•
An increase
(decline)
in the expected rate
of inflation.
•
Higher
(lower)
real incomes abroad.
•
A reduction
(increase)
in the exchange rate
value of the nation’s currency.