Question

A movement along the demand curve occurs when a price change leads to a change in the quantity demanded. When economists talk of increasing or decreasing demand, they mean shifts of the demand curve-a change in the quantity demanded at any given price. An increase in demand causes a right ward shift of the demand curve. A decrease in demand causes a leftward shift.

Answer 1

In the macroeconomic sense, the fluctuations in the demand supply are caused by factors such as interest rates and inflations. As a result of this, say inreased inflation, the prices will rise, as a result of which equilibrium quantity is decreased because the demand curve shifts inwards. However, we see government intervening in such scenarios to tackle this issue so that the market equilibrium is maintained as close as possible to the previous equilibrium. They alter policies , extend subsidies etc which in turn leads a counter shift in the supply curve which is expected to help sustain the previous equilibrium with minimum market deviation.