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  2. Aggregate demand - Wikipedia

    en.wikipedia.org/wiki/Aggregate_demand

    Investment has positive relationship with the output and negative relationship with the interest rate. Thus, an increase in the interest rate will cause aggregate demand to decline. Interest costs are part of the cost of borrowing and as they rise, both firms and households will cut back on spending. This shifts the aggregate demand curve to ...

  3. AD–AS model - Wikipedia

    en.wikipedia.org/wiki/AD–AS_model

    The dynamic aggregate demand curve shifts when either fiscal policy or monetary policy is changed or any other kinds of shocks to aggregate demand occur. [5]: 411 Changes in the level of potential Y also shifts the AD curve, so that this type of shocks has an effect on both the supply and the demand side of the model. [5]: 412

  4. AD–IA model - Wikipedia

    en.wikipedia.org/wiki/AD–IA_model

    A shift in demand can occur for the following reasons: A change in government spending; A change in consumption; A change in taxes; A change in the monetary rule; Example: Suppose the government were to cut taxes. This would lead to an increase in expenditures and thus an increase in demand.

  5. Keynesian cross - Wikipedia

    en.wikipedia.org/wiki/Keynesian_cross

    If any of the components of aggregate demand, a, I p or G rises, for a given level of income, Y, the aggregate demand curve shifts up and the intersection of the AD curve with the 45-degree line shifts right. Similarly, if any of these three components falls, the AD curve shifts down and the intersection of the AD curve with the 45-degree line ...

  6. IS–LM model - Wikipedia

    en.wikipedia.org/wiki/IS–LM_model

    Starting from one point on the aggregate demand curve, at a particular price level and a quantity of aggregate demand implied by the IS–LM model for that price level, if one considers a higher potential price level, in the IS–LM model the real money supply M/P will be lower and hence the LM curve will be shifted higher, leading to lower ...

  7. Supply and demand - Wikipedia

    en.wikipedia.org/wiki/Supply_and_demand

    If the demand decreases, then the opposite happens: a shift of the curve to the left. If the demand starts at D 2, and decreases to D 1, the equilibrium price will decrease, and the equilibrium quantity will also decrease. The quantity supplied at each price is the same as before the demand shift, reflecting the fact that the supply curve has ...

  8. Demand-pull inflation - Wikipedia

    en.wikipedia.org/wiki/Demand-pull_inflation

    Demand-pull inflation occurs when aggregate demand in an economy is more than aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods". [1]

  9. Demand shock - Wikipedia

    en.wikipedia.org/wiki/Demand_shock

    A positive demand shock increases aggregate demand (AD) and a negative demand shock decreases aggregate demand. Prices of goods and services are affected in both cases. When demand for goods or services increases, its price (or price levels) increases because of a shift in the demand curve to the right. When demand decreases, its price ...