Determinants of AD
Aggregate demand shifts result from changes in consumption (from income, wealth, confidence, interest rates), investment (from growth expectations, confidence, interest rates), government spending, and net exports (from world income, exchange rates).
Real World
In Rishi Sunak's 2021 Budget, the combination of furlough scheme income support (boosting C), super-deduction tax relief (boosting I), and increased NHS spending (boosting G) all shifted UK aggregate demand rightward simultaneously.
Exam Focus
For 'analyse' questions, build a chain of reasoning: identify the component affected, explain the transmission mechanism, then state the AD shift.
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