Business cycles
Decrease in AD
Factors of AD
Aggregate demand could be decreased by numerous reasons:
- reduction in export arising from economic recession in closely related foreign economies;
- firms` more pessimistic future expectations that reduce investment expenditures;
- stagnancy in technological change that reduces investment expenditures;
- people`s more pessimistic future expectations that reduce consumption expenditures;
- government contractionary fiscal policy;
- central bank`s contractionary monetary policy.