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A sudden increase in household wealth is an example of a ______ demand shock, which shifts the AD curve to the ______.

A. negative; left
B. positive; left
C. negative; right
D. positive; right

User UMAIR ALI
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Answer:

The answer is D: positive; right

Step-by-step explanation:

Aggregate demand is the total amount of goods and services consumers are willing to purchase in a given economy and during a certain period.

AD=C+I+G+(X−M)

where:

C=Consumer spending on goods and services

I=Investment spending on business capital goods

G=Government spending on public goods and services

X=Exports

M=Imports

A demand shock is an important change somewhere in the economy that affects multiple spending decisions and causes an abrupt and unexpected shift in the aggregate demand curve.

The aggregate demand curve tends to shift to the right when total consumer spending increases.

User Alpesh Prajapati
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