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Aggregate Demand

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One of several specific aggregate demand determinants assumed constant when the aggregate demand curve is constructed, and that shifts the aggregate demand curve when it changes. An increase in the inflationary expectations causes an increase (rightward shift) of the aggregate curve. A decrease in the inflationary expectations causes a decrease (leftward shift) of the aggregate curve. Other notable aggregate demand determinants include interest rates, federal deficit, and the money supply. (www.amosweb.com)
The expectations for inflation are that the consumers concerning future inflation. Inflationary expectations and aggregate demand work together like buyers' expectations work for market demand. When purchasing goods, the buyer looks for the lowest possible price.
Expecting Higher Inflation Rates
Suppose that the inflation rate has been running at a nice constant low rate for several years. Households have been able to include this specific inflation rate into their assorted plans. Now suppose that irresponsible monetary policy causes an increase in the inflation to a higher percent one year, and then continued to climb for the next several years. This would cause a major problem with the household sector and many individuals would be in trouble. The individuals would adjust their expenditures in consumption and spend more because they would realize that the house payment will be in the rise for the next couple of years. The increase in consumption expenditures will increase aggregate demand. Expectations of lower inflation rates will be good for the household. The lower the rates for housing will cause a decrease in the consumption expenditures which will cause a decrease aggregate demand.

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