
Concept Introduction:
Aggregate
Shift in Aggregate Demand Curve: There are several factors on which the shifting of demand curve depends. Some of them are:
- Changes in expectation: when consumers are more confident about future then AD curve shifts in the right direction and vice versa.
- Changes in wealth: when the wealth of an individual increases that means real value of assets increases then the AD curve shifts in right direction and when it decreases then it shifts leftward.
- Size of stock of physical capital: when the size of stock is small then AD curve shifts rightward and vice versa.
- Fiscal policy: It includes government expenditure and taxes. When government expenditure is increased or taxes are decreased then Ad curve shifts rightward and vice versa.
Monetary policy: It includes money supply changes. When money supply increases Ad curve shifts rightward and vice versa.
Appreciation: It is defined as the increase in the value of currencies. It leads to increase in import of goods and services. Consider value of $1 is equal to INR 60. If value of $ increases to INR 70 then dollar has appreciated
Short Run Aggregate Supply (SRAS): It is a positively slopped curve in which supply increases when price rises. The reason for upward slopping is that the wages are sticky in the short run due to formal or informal contracts. At higher aggregate prices there is a higher profit leading to high level of output.
Shift in Aggregate Supply Curve: There are several factors on which the shifting of demand curve depends. Some of them are:
- Changes in nominal wages: When the nominal wage increases then the SRAS curve shifts leftward and vice versa.
- Changes in productivity: When productivity increases due to introduction of new technology or innovation then the SRAS curve shifts rightward and vice versa.
- Changes in commodity price: Consider the oil price to increase then in such case SRAS curve shifts leftward.

Want to see the full answer?
Check out a sample textbook solution
- how commond economies relate to principle Of Economics ?arrow_forwardCritically analyse the five (5) characteristics of Ubuntu and provide examples of how they apply to the National Health Insurance (NHI) in South Africa.arrow_forwardCritically analyse the five (5) characteristics of Ubuntu and provide examples of how they apply to the National Health Insurance (NHI) in South Africa.arrow_forward
- Outline the nine (9) consumer rights as specified in the Consumer Rights Act in South Africa.arrow_forwardIn what ways could you show the attractiveness of Philippines in the form of videos/campaigns to foreign investors? Cite 10 examples.arrow_forwardExplain the following terms and provide an example for each term: • Corruption • Fraud • Briberyarrow_forward
- In what ways could you show the attractiveness of a country in the form of videos/campaigns?arrow_forwardWith the VBS scenario in mind, debate with your own words the view that stakeholders are the primary reason why business ethics must be implemented.arrow_forwardThe unethical decisions taken by the VBS management affected the lives of many of their clients who trusted their business and services You are appointed as an ethics officer at Tyme Bank. Advise the management regarding the role of legislation in South Africa in providing the legal framework for business operations.arrow_forward
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education





