Exhibit 14-4 Aggregate supply and demand curves

In Exhibit 14-4 which of the following is not consistent with a shift in the aggregate demand curve from AD₁ to AD₂?

Question

Exhibit 14-4 Aggregate supply and demand curves In Exhibit 14-4 which of the following is not consistent with a shift in the aggregate demand curve from AD₁ to AD₂?

Quizplus · Accepted Answer

A decrease in consumer spending would cause a shift to the left in the aggregate demand curve, not a shift to the right as shown in the question. An increase in investment, an increase in government spending, and an increase in net exports would all cause a shift to the right in the aggregate demand curve, consistent with the shift shown in the question.

Exhibit 14-4 Aggregate Supply and Demand Curves