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Which one of the following would cause a shift to the right in aggregate demand?
A decrease in consumer confidence
An increase in expected inflation
Depreciation of the pound against other currencies
A decrease in expected inflation
Factors Shifting Aggregate Demand (AD) Rightward:
Depreciation of the pound makes UK exports cheaper and imports more expensive, increasing net exports.
Higher net exports increase aggregate demand, shifting the curve to the right.
Elimination of Other Options:
A: Lower consumer confidence decreases consumption, shifting AD leftward.
B: Increased expected inflation may reduce real spending.
D: Lower expected inflation discourages spending.
References:
ICWIM Module 1: Macroeconomic factors influencing aggregate demand.
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