Why Aggregate Demand Shifts Anonymous Student Essay

Why Aggregate Demand Shifts Anonymous student University of the People Why Aggregate Demand Shifts Today under review, is the study of shifting aggregate demand models and reasons why shifts occurs. We shall also discuss shifts in short run aggregate supply and possible causes for those shifts as well. (AmosWeb, 2014) This model above shows a downward facing aggregate demand curve, the aggregate demand is always represented by a downward slope. The downward slope represents aggregate demand in the relationship to the Real GDP and GDP Deflator. Fig. 1 (AmosWeb, 2014) Fig. 2 (AmosWeb, 2014) In the above models, the green line represents a shift in the aggregate demand, increased to the left (Fig. 1) and a decrease to the right (Fig. 2). We must ask why do these shifts occur and how can we counteract these shifts? Shifts in the aggregate demand are caused by innumerable factors. According to Boundless, (2014) GDP is defined as â€Å"Y = C + I + G + (X-M) is the standard equational (expenditure) representation of GDP. â€Å" C is consumption ( consumers and businesses), I is investments, G is government and X= exports M- Imports X-m is is net imports. Now a change in any one of these factors can affect aggregate demand. Government spending can have a drastic effect to GDP an increase in spending will increase aggregate demand and a decrease will decrease aggregate demand. Also if there s a scareShow MoreRelatedManagerial Economics Assignments3979 Words   |  16 Pages Date Received:........................................................... | | | Programme | Master of Business Administration | Module Name | Assignment: Managerial Economics | Surname | Amweenje | First Name/S | Edward Ludwig | Student Number | MBA1120419 | Date Submitted | 21 May 2012 | Postal Address | P.O. 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