Classify each event either as shifting the aggregate demand curve or as causing movement along the curve.

a. As inflation drops to nearly zero, people save more and therefore more loanable funds are available.
b. Technological advances generate wealth in a broad range of industries.

When technological advances generate wealth in a broad range of industries, the movement along the demand curve denotes a change in both price and quantity demanded. This is obtainable because technological advances usually reduce costs of production and prices. The reduced price can increase demand. On the other hand, inflation that drops to nearly zero will cause a shift in a demand curve because the quantity demanded can increase with the price of the good remaining the same.

Classify each event either as shifting the aggregate demand curve or as causing movement along the curve. a. As inflation drops to nearly zero, people save more and therefore more loanable funds are available. b. Technological advances generate wealth in a broad range of industries.

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Classify each event either as shifting the aggregate demand curve or as causing movement along the curve.

a. As inflation drops to nearly zero, people save more and therefore more loanable funds are available.
b. Technological advances generate wealth in a broad range of industries.