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What factors increase AD? (positive shocks)

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4 votes

Answer: fiscal policy, such as an economic stimulus or tax cuts.

Explanation: A positive demand shock can come from fiscal policy, such as an economic stimulus or tax cuts. Negative demand shocks can come from contractionary policy, such as tightening the money supply or decreasing government spending. Whether positive or negative, these may be considered deliberate shocks to the system.

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