Reduced optimism from the business world.

• Demand shocks ( efterfrågestörningSwedish )
• Business world ( näringslivetSwedish )
• GDP*, y* = potential GDP
• LAS, LRAS = ( Long-term Aggregate Supply )  ,  ( Long-run Aggregate Supply )
• AD = Aggregate Demand
• e = Optimism
• R = Interest rate
• I = Investment
• ( Md/P ) = Money Demand
• ( Ms/P ) = Money Supply
• E = Exchange rate ( växelkurs, valutakursSwedish )
• X = Net exports ( exports - imports )

Demand shocks

Generally aggregate demand AD is affected by:

• [ Human factor ]    - Fiscal and monetary policy.
• [ Demand shock ] - Sudden and unexpected recession/economic downturn in the surrounding world.
• [ Demand shock ] - Decreased optimism in the business world.

1. e↓ => I↓ => y↓ => IS-shift =>   ( Md/P ) ↓   =>   ( Md/P )  <  ( Ms/P )   =>


2. R↓ => I↑
   E↓ => X↑
   ________
   y↑