The aggregate demand curve is downward sloping because a decrease in the overall price level increases the quantity of goods and services demanded. This behavior reflects economic effects such as the wealth, interest rate, and exchange rate effects.

Aggregate demand consists of consumption, investment, government spending, and net exports. Government saving, however, relates to the fiscal balance of government revenues and expenditures rather than spending on goods and services.

The wealth effect posits that when the price level falls, the real value of money held by consumers rises, making them feel wealthier. This leads to increased spending on goods and services, contributing to the downward slope of the aggregate demand curve.

Aggregate demand measures the total spending on domestically produced goods and services across all sectors of an economy. It incorporates components such as consumption, investment, government spending, and net exports.

Higher interest rates make borrowing more expensive, which discourages both consumer spending and business investment. The resulting decrease in expenditure leads to a leftward shift in aggregate demand.

The exchange rate effect explains that a lower domestic price level can lead to a depreciation of the nation's currency, making exports more competitive and imports more expensive. This dynamic boosts net exports, shifting aggregate demand to the right.

Cutting taxes increases consumers' disposable income, which encourages higher consumption spending. This increase in consumption shifts the aggregate demand curve to the right.

Higher interest rates increase the cost of borrowing, making it more expensive for businesses to finance investment projects. As investment spending falls, aggregate demand decreases.

A tax cut boosts disposable income, which in turn increases consumption expenditure. This rise in consumption causes the aggregate demand curve to shift to the right.

According to the wealth effect, a higher price level reduces the real value of money, which diminishes consumers' purchasing power. When consumers feel poorer in real terms, they tend to reduce their consumption spending.

Improved consumer confidence generally leads to increased spending because consumers expect better economic conditions. This boost in spending shifts the aggregate demand curve to the right.

A steep aggregate demand curve means that output demanded is relatively insensitive to changes in the price level. In other words, large changes in prices are required to produce significant changes in the quantity of goods and services demanded.

The interest rate effect demonstrates that a lower price level reduces the demand for money, leading to lower interest rates. These lower rates then stimulate both investment and consumption, thereby increasing aggregate demand.

Lowering interest rates reduces the cost of borrowing, which encourages both consumer spending and business investment. This leads to a rightward shift in the aggregate demand curve as total spending in the economy increases.

Expansionary fiscal policy is designed to stimulate the economy by boosting aggregate demand. Cutting taxes increases disposable income, leading to higher consumption and a rightward shift in the aggregate demand curve.

An increase in government spending directly raises aggregate demand, and improved consumer expectations lead to higher consumption. The combination of these effects results in a rightward shift of the aggregate demand curve.

An increase in the money supply tends to lower interest rates, making borrowing cheaper and encouraging both investment and consumption. This increased spending shifts the aggregate demand curve to the right.

A larger wealth effect implies that consumers gain more purchasing power when prices fall. Therefore, an economy with a higher proportion of liquid assets will see a larger increase in consumption, resulting in a more pronounced rightward shift in its aggregate demand curve.

Increased saving implies a reduction in consumer spending, leading to a leftward shift in aggregate demand. With less demand for loans, the real interest rate may fall as there is less upward pressure from borrowing.

When price levels fall, consumers experience an increase in real wealth (wealth effect) and the domestic currency may depreciate (exchange rate effect). This combination stimulates higher domestic consumption and improves net exports, hence shifting aggregate demand to the right.