Final answer:
Movement along an aggregate demand curve can be attributed to changes in aggregate supply, government spending, consumer confidence, investment levels, and export demand. These factors influence whether aggregate demand increases, decreases, or remains steady relative to changes in aggregate supply.
Step-by-step explanation:
A movement along an aggregate demand curve may occur for various reasons. An increase in aggregate supply typically leads to higher incomes, which can boost consumer and investment spending, moving the aggregate demand curve to the right. However, this shift in demand does not always match the change in supply, leading to potential imbalances. Factors such as changes in government spending and taxes also play a critical role in influencing aggregate demand. If the government increases spending on services like national defense, social security, and healthcare, this can result in a rise in demand. Conversely, if households become more cautious about spending, firms cut back on investment, or there is a decrease in export demand, aggregate demand may not increase proportionally to aggregate supply or could even shift to the left.
Events that raise aggregate demand may include a surge in export sales, an elevation in business confidence prompting more investment, higher government spending, or tax cuts. The Keynesian economic perspective suggests that such events will cause the aggregate demand curve to shift rightwards, from AD to AD1, leading to a new equilibrium with increased output and lower unemployment. Yet, there might be inflationary pressures due to the higher price level.