How is an aggregate demand curve derived? What would cause the aggregate demand curve to shift to the right? Macro Econ 3rd ed., McEachern

In an
economy, the total demand for goods and services is referred to as the aggregate demand. The
quantity of goods and services bought is dependent on the price. The aggregate demand curve is a
graphical representation of the price versus the gross domestic produce; or the GDP at different
prices levels.

The shifting of the demand curve to the right implies that for
the same price, the total goods and services being bought has increased. There are many factors
that can result in this. Some of these include changes in interest rates, changes in government
spending and investor demand. If the government were to increase spending to boost the economy,
the aggregate demand curve shifts to the right. Similarly, a decrease in interest rates leads to
the aggregate demand curve shifting to the right. An improvement in the state of the economy
with rising income levels also increases the GDP at any particular price. This again shows up as
the aggregate demand curve shifting to the right.

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