Figure 9.1 shows three aggregate demand curves. A movement from curve AD1 to curve AD0 could be caused by a(n)
A) decrease in the money supply.
B) decrease in taxes.
C) increase in the price level.
D) increase in government spending.

Question

Figure 9.1 shows three aggregate demand curves. A movement from curve AD1 to curve AD0 could be caused by a(n) 
A) decrease in the money supply.
B) decrease in taxes.
C) increase in the price level.
D) increase in government spending.

Quizplus · Accepted Answer

A decrease in the money supply would cause a shift of the AD curve to the left, resulting in a movement from AD1 to AD0. Choices B, C, and D would cause a shift of the AD curve, not a movement along it.

Figure 91 Shows Three Aggregate Demand Curves