What causes the aggregate demand curve to shift?

Aggregate demand is the total demand for all goods and services in an economy; it is essentially gross domestic product. Its components are consumption, investment, government spending and net exports (exports - imports). A shift can be caused by a change in any of these components.
For example, an increase in government spending would cause the aggregate demand curve to shift to the right, which makes sense because you would expect this increased spending and demand in the economy to increase gross domestic product. Conversely, a reduction in net exports (through less exports or more imports) would cause a shift to the right.

JW
Answered by James W. Economics tutor

4108 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

How do you know whether the demand for a good is price elastic or price inelastic?


What Components make up the Aggregate Demand Curve


How does business confidence affect the economic cycle? And why?


How does an increase in investment affect the economy?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning