Figure 14.1
-Figure 14.1 shows three aggregate demand curves. A movement from curve AD2 to curve AD1 could be caused by an)
A)increase in the money supply.
B)increase in taxes.
C)increase in the price level.
D)increase in government spending.

Question

Figure 14.1
-Figure 14.1 shows three aggregate demand curves. A movement from curve AD2 to curve AD1 could be caused by an)
A)increase in the money supply. 
B)increase in taxes. 
C)increase in the price level. 
D)increase in government spending.

Quizplus · Accepted Answer

An increase in taxes would reduce consumers' disposable income, leading to a decrease in consumption and shifting the aggregate demand curve from AD2 to AD1.

Figure 14.1 -Figure 14.1 Shows Three Aggregate Demand Curves. a Movement from Movement