Understanding Aggregate Demand: Movements and Shifts in the Curve

The video explains aggregate demand, which represents the total expenditure on goods and services produced within a country at various price levels. It highlights the inverse relationship between price levels and real output, where a decrease in price levels leads to increased demand and output. The video also discusses how changes in non-price factors can shift the aggregate demand curve, either inward or outward, depending on whether factors like consumption, investment, government spending, or net exports increase or decrease.

What happens to real output when the average price level in an economy decreases?

• Real output becomes unpredictable

• Real output increases

• Real output remains constant

• Real output decreases

What causes a movement along the aggregate demand curve?

• Changes in government policies

• Changes in the price level

• Technological advancements

• Changes in consumer preferences

Which of the following can cause an inward shift in the aggregate demand curve?

• Decrease in net exports

• Increase in government spending

• Technological innovation

• Increase in consumer confidence

What is the result of an outward shift in the aggregate demand curve?

• Unpredictable economic activity

• Decrease in economic activity

• Increase in economic activity

• Stagnation of economic activity

Which factor is NOT directly responsible for shifting the aggregate demand curve?

• Changes in net exports

• Changes in government spending

• Changes in the price level

• Changes in investment