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Aggregate demand often experience an increase and decrease due to different factors. The table showing the change in each determinant that is necessary to decrease aggregate demand.

  • Consumer expectations about future profitability = improve
  • Government spending = Increase
  • Interest rates = Increase
  • The value of the domestic currency relative to the foreign currency = Appreciate/Increase.

Aggregate demand is simply known to be the sum of the consumption expenditure, government expenditure, investment expenditure, and net exports of a country.

It is often used to know the changes in income, output, and level of employment in the economy.

A decrease in aggregate demand will make Consumer expectation about future profitability Worsen while an increase in aggregate demand will make Consumer expectation about future profitability to improve.

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