Final answer:
An increase in investment will cause the aggregate demand (AD) curve to increase. This occurs when firms are optimistic about future profits and decide to invest in expanding their operations or purchasing new equipment.
Step-by-step explanation:
An increase in investment will cause the aggregate demand (AD) curve to increase. When investment increases, there is more spending in the economy, which leads to an increase in aggregate demand. This can occur because firms are optimistic about future profits and decide to invest in expanding their operations or purchasing new equipment.
For example, if a company decides to build a new factory, this would require investment in construction materials, labor, and machinery. This increased investment would lead to increased spending and a shift in the AD curve to the right. As a result, both real GDP and the price level would increase.