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

Question

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

Quizplus · Accepted Answer

A movement from point b to point c on the aggregate demand curve can be caused by a decrease in the price level. This would increase the quantity demanded of goods and services, leading to an increase in real GDP. An increase in the money supply or a decrease in taxes would shift the aggregate demand curve to the right, causing an increase in both the price level and real GDP. A decrease in government spending would shift the aggregate demand curve to the left, causing a decrease in both the price level and real GDP. None of these choices would cause a movement along the aggregate demand curve from point b to point c.

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