Use the figure below to answer the following questions. Figure 10.3.5 -Refer to Figure 10.3.5.The shift of the aggregate demand curve from AD₀to AD₁might have been the result of A)an increase in government expenditure. B)a rise in the foreign exchange rate C)an increase in taxes. D)a decrease in the quantity of money. E)none of the above.

Question

Quizplus · Accepted Answer

An increase in government expenditure would increase aggregate demand, shifting the AD curve to the right. Choices B, C, and D would decrease aggregate demand, shifting the AD curve to the left. Therefore, choice A is the best answer.

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