Factors Shifting the Aggregate Demand (AD) and Aggregate (AS) Curves

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27 Terms

1
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Increase in wealth

Increase in consumption (C).

Aggregate demand (AD=C+I+G+NX) curve shifts right.

2
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Decrease in wealth

Decrease in consumption (C).

Aggregate demand (AD=C+I+G+NX) curve shifts left.

3
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Increase in interest rates

Decrease in consumption (C) and desired investment (I).

Aggregate demand (AD=C+I+G+NX) curve shifts left.

4
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Decrease in interest rates

Increase in consumption (C) and desired investment (I).

Aggregate demand (AD=C+I+G+NX) curve shifts right.

5
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Increase in optimism about the future

Increase in consumption (C) and desired investment (I).

Aggregate demand (AD=C+I+G+NX) curve shifts right.

6
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Decrease in optimism about the future

Decrease in consumption (C) and desired investment (I).

Aggregate demand (AD=C+I+G+NX) curve shifts left.

7
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Increase in net taxes

Decrease in consumption (C) and/or desired investment (I)--depending on whose taxes are increased.

Aggregate demand (AD=C+I+G+NX) curve shifts left.

8
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Decrease in net taxes

Increase in consumption (C) and/or desired investment (I)--depending on whose taxes are decreased.

Aggregate demand (AD=C+I+G+NX) curve shifts right.

9
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Increase in government spending

Increase in government spending (G).

Aggregate demand (AD=C+I+G+NX) curve shifts right.

10
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Decrease in government spending

Decrease in government spending (G).

Aggregate demand (AD=C+I+G+NX) curve shifts left.

11
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Increase in foreign incomes

Increase in net exports (NX).

Aggregate demand (AD=C+I+G+NX) curve shifts right.

12
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Decrease in foreign incomes

Decrease in net exports (NX).

Aggregate demand (AD=C+I+G+NX) curve shifts left.

13
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Increase in the foreign exchange value of the domestic currency

Decrease in net exports (NX).

Aggregate demand (AD=C+I+G+NX) curve shifts left.

14
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Decrease in the foreign exchange value of the domestic currency

Increase in net exports (NX).

Aggregate demand (AD=C+I+G+NX) curve shifts right.

15
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Increase in resource prices

Short-run aggregate supply (SRAS) curve shifts left.

16
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Decrease in resource prices

Short-run aggregate supply (SRAS) curve shifts right.

17
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Increase in the expected price level

Short-run aggregate supply (SRAS) curve shifts left.

18
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Decrease in the expected price level

Short-run aggregate supply (SRAS) curve shifts right.

19
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Adverse supply shock

Short-run aggregate supply (SRAS) curve shifts left.

20
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Positive supply shock

Short-run aggregate supply (SRAS) curve shifts right.

21
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Increase in the quantity of resources available

Long-run aggregate supply (LRAS) curve shifts right.

22
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Decrease in the quantity of resources available

Long-run aggregate supply (LRAS) curve shifts left.

23
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Improvements in technology

Long-run aggregate supply (LRAS) curve shifts right.

24
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Positive changes in "the rules of the game."

Long-run aggregate supply (LRAS) curve shifts right.

25
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Adverse changes in "the rules of the game."

Long-run aggregate supply (LRAS) curve shifts left.

26
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Increase in the price level

Aggregate demand (AD) curve does not shift.

Short-run aggregate supply (SRAS) curve does not shift.

Long-run aggregate supply (LRAS) curve does not shift.

27
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Decrease in the price level

Aggregate demand (AD) curve does not shift.

Short-run aggregate supply (SRAS) curve does not shift.

Long-run aggregate supply (LRAS) curve does not shift.