With stock prices rising, Americans who hold stocks suddenly become less concerned about saving for retirement and increase their current consumption. As a result, the
A) aggregate demand curve shifts leftward
B) aggregate demand curve shifts rightward
C) aggregate supply curve shifts leftward
D) aggregate supply curve shifts rightward

Question

Quizplus · Accepted Answer

When Americans who hold stocks feel wealthier due to rising stock prices, they are likely to increase their current consumption. This increase in consumption directly contributes to an increase in aggregate demand, hence the aggregate demand curve shifts rightward.

With Stock Prices Rising, Americans Who Hold Stocks Suddenly Become