2.1 Changes in which factors could cause aggregate demand to shift from AD to AD1? What could happen to the unemployment rate? What could happen to the inflation rate?

There are many factors that cause aggregate demand to shift from AD to AD1. The unemployment rate will fall and inflation will increase.

Explanation:

A Shift in aggregate demand from AD to AD1 means there has been a  fall in demand. Various factors that cause demand to decrease are:

So due to the decrease in demand finally the unemployment will increase and with that, the inflation rate will increase making  things dearer.

the benefits of raising bc’s minimum wage to $15 through a

series of pre-announced staged increases far outweigh the likely

costs. claims that such an increase will lead to massive job losses

in low-wage sectors of the economy are not credible.

• an increase to $15 would result in some job losses. however,

the likely impact is less than a 1 per cent reduction in the overall

provincial employment rate, and a 7.6 per cent reduction in the

employment rate for those currently making between $10.25

and $15 per hour.

• the large job loss impacts predicted by some opponents of

minimum wages misrepresent the existing economic research. in

reading and using that research, it is important to recognize that

estimates showing job loss effects of minimum wage increases

apply only to teenagers. estimated effects for young adult and

adult workers range from insignificant to non-existent.

• focusing on teenage workers plays up an inaccurate stereotype

about who earns very low wages in bc and leads to exaggerated

claims about job losses. only 26 per cent of those currently making

between $10.25 and $12 are teenagers, and only 5 per cent

of those making between $12 and $15 are teenagers.