Determinants of Aggregate Demand vs Determinants of Aggregate Supply

The determinants of aggregate demand are the non-price factors that shift the AD curve by changing consumption, investment, government spending, or net exports.

AD = C + I + G + Xn, so anything other than the price level that changes one of these components shifts the whole AD curve. Examples: consumer confidence and taxes (C), interest rates and business expectations (I), government budget decisions (G), and foreign income or exchange rates (Xn). A change in the price level only causes movement along AD, not a shift; this distinction is a common exam trap. Rightward shifts raise real GDP and the price level; leftward shifts lower them.

The determinants of aggregate supply are non-price factors, input prices, productivity, taxes/subsidies on producers, and expectations, that shift the SRAS curve.

SRAS shifts when something other than the price level changes firms' per-unit production costs. Falling input/resource prices (e.g., cheaper oil or lower nominal wages) and rising productivity shift SRAS right, lowering the price level and raising output; supply shocks like a spike in energy prices shift it left, causing cost-push inflation. Business taxes and regulation also shift SRAS, while changes that raise the economy's productive capacity shift both SRAS and LRAS. Distinguish a shift of SRAS (a determinant changed) from a movement along it (the price level changed).