Describe what happens to the Aggregate Demand curve in each of the situations below. a. The stock market crashes causing everyone's wealth to decrease.
b. The government decides to invest in new fighter jets for the military.
c. Large tariffs are enforced on imports causing imports to decrease severely while exports stay the same.
d. There is a significant increase in interest rates causing many potential home buyers to leave the housing market

A. The demand curve shifts towards the left

B. The demand curve moves to the right

C. Demand curve shifts to the right

D. Demand curve shifts to the left

Explanation:

A total shift in the demand curve can be caused by so many factors, mostly those that affect the income of the population on a large scale, reducing their propensity to spend money.

A. If The stock market crashes causing everyone's wealth to decrease, there will be a decrease in demand, since the purchasing power of the masses has been reduced due to the economic downturn. This is reflected in the demand curve by a shift to the left.

B. If the government decides to get new fighter jets for the military, it means that they will be putting more money into public circulation as the fighter jets will be purchased from the corporations in the country. This increases the purchasing power of the populace, thereby leading to a positive change in the aggregate demand.

C. If large tariffs are imposed on imports, the populace will demand less of the imported goods, this will cause a reduction in the aggregate demand, causing it to shift leftward.

D. If there is an increase in the interest rates and homeowners leave, the demand curve will fall towards the left because the overall demand is reducing. This is because people do not want to invest their money in buying homes anymore.

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