What Will Shift The Aggregate Demand Curve? The aggregate demand curve tends to shift to the left when total consumer spending declines. Consumers might spend less because the cost of living is rising or because government taxes have increased. … The government might decide to raise taxes or decrease spending to fix a budget deficit.
What Term Is Used To Describe The Maximum Quantity That An Economy Can Produce In The Context Of Its Existing Factors Of Production Market And Legal Institutions? Potential GDP, or full-employment GDP, is the maximum quantity that an economy can produce given full employment of its existing levels of labor, physical capital, technology, and institutions.
How Does Expected Future Output Affect The IS Curve? The IS curve could shift down and to the left if: (1) expected future output falls, because this increases desired saving; (2) government purchases fall, because this increases desired saving; (3) the expected future marginal product of capital falls, because this decreases desired investment; or (4)