What would cause the ggregate demand curve to shift outward

What would cause the ggregate demand curve to shift outward and to the right? 62. What is the impact of an increase in aggregate demand on [a] price level and [b] real GDP2

Solution

Answer : 61) We know that in equilibrium condition aggregate demand = aggregate supply. Now if demand increase in short-run and long-run then the aggregate demand curve shift to rightward. But if demand decrease then the aggregate demand curve shift to leftward. Thus, aggregate demand curve shift to outward.

62) a) If aggregate demand curve shift to rightward, i.e., if aggregate demand increase then the price level increase in both short run and long run because of limited quantities.

b) In short run if aggregate demand increase then price level increase. As price level increase , real GDP also increase. But in long run real GDP is constant and hence if demand increase then it has no impact on real GDP.