New tax credit investment enhances aggregate demand. therefore aggregate demand shifts rightward.
b) Rising investment diminishes aggregate demand, lowering consumption. aggregate demand decreases.
c) When the stock market collapses, stock prices may fall, resulting in less demand and more supply, which lowers aggregate demand.
This is further explained below.
Generally, The demand curve shows how price affects quantity required over time. Price is usually on the left vertical axis and quantity requested on the horizontal.
Demand curves illustrate the amount requested at each price. Demand curves are graphical representations of demand schedules.
a) If there is an increase in the amount of investment that qualifies for the new tax credit, aggregate demand will go up. Consequently, the aggregate demand moved in the right direction.
b) There is a fall in aggregate demand as a result of a decline in investment brought on by an increase in investment, which in turn brings about a fall in consumption.
Therefore, there is a move toward a declining trend in aggregate demand.
c) When the stock market collapses, there is a probability that the price of stocks will decline. As a consequence, there will be less demand and more supply at the price, which will lead to less consumption, which will shift aggregate demand downwards, which will result in a decrease in aggregate demand.
Read more about the demand curve
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