Figure 14.1
-Figure 14.1 shows three aggregate demand curves. A movement from point b to point a could be caused by a(n)
A) decrease 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 point b to point a could be caused by a(n)
A) decrease in the money supply. 
B) increase in taxes. 
C) increase in the price level. 
D) increase in government spending.

Quizplus · Accepted Answer

A movement from point b to point a would indicate a decrease in aggregate demand, which could be caused by an increase in the price level. A decrease in the money supply or an increase in taxes would also lead to a decrease in aggregate demand, but these options are not represented in the graph. An increase in government spending would shift the aggregate demand curve to the right, increasing aggregate demand.

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