List and describe in your own words 3 determinant of aggregate demand and 3 determinants of aggregate supply?

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David · Accepted Answer

The three determinants of aggregate demand are as follows. 
 Interest rate – The presence of low interest rate would tend to enhance the overall 
aggregate demand by enhancing both the consumption related expenditure coupled 
with private investments. This is because incremental capital is available at a lower 
cost and demand increases with rise in interest rates. 
 Expectations about future economic climate – The various factors constituting 
aggregate demand are also impacted by the expectations of the various stakeholders in 
relation to the future economic scenario. A gloomy scenario would tend to have an 
adverse effect on AD while a bright, growing economy would enhance the overall 
AD. 
 Money supply – The amount of money supply also impacts the AD. Thus, if money 
supply increases, typically the cost would be lower due to ample liquidity which 
would enhance AD while a lower money supply would bring down the expenditures 
and also AD.

List and describe in your own words 3 determinant of aggregate demand and 3 determinants of aggregate supply?

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