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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