With Aggregate Supply (AS) and Aggregate Demand (AD)
model and AS/AD curves what types of goods cause the shift in those curves? Is
the demand for supply and products a cause to affect those curves as well? Explain
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Goods such as : giffen goods, goods of ostentation, and inferior good causes a shift in the aggregate demand and supply curve. These goods causes what is normally known as the abnormal shifting ., that is, the higher the price the higher the quantity demanded. Increase in income does not increase the demand of that particular commodity but instead , a person would shift to a commodity of better quality. At some point , the rich purchase a product just because it is expensive . They believe that since the price is high, so is the quality of the product.
The primary cause of shift in the economy is aggregate demand. Aggregate demand can be effected by consumers both local and international. The higher the demand of particular goods causes a shift in the aggregate supply and demand model.
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