Various factors responsible for reducing the supply of goods and services in the economy are given below: 1. Scarcity of Factors of Production 2. Hoarding 3. Trade Union Activities 4. Natural Calamities 5. Increase in Exports 6. Law of Diminishing Returns 7. War 8. International Causes:
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Various factors responsible for increase in aggregate demand for goods and services are as follows, an increase in the government expenditure as a result of the outbreak of war, developmental and welfare activities causes an increase in the aggregate demand for goods and services hi the economy.