Question

Name some economic events which could cause aggregate demand to shift. (select all that apply)

	A.	A relative increase in prices in foreign countries
	B.	Artificial Intelligence used to manufacture industrial robots
	C.	A sudden decrease in population
	D.	A change in consumer confidence
	E.	New discoveries of oil in the Arctic

Answer 1

The options which could cause aggregate demand to shift are:

(A) A relative increase in prices in foreign countries: This decreases imports spending. So, net exports rises. This causes the aggregate demand to shift right. Consumers prefer to consume more of domestically produced goods.

(C) A sudden decrease in population : It will decrease the aggregate demand, so the aggregate demand curve shift to left.

(D) A change in consumer confidence: An increase in consumer confidence would shift the aggregate demand to right side and vice versa.

Whereas, option (B) and (E) shifts the aggregate supply curve.