Aggregate demand shifts right when the government
A)raises personal income taxes.
B)increases the money supply.
C)repeals an investment tax credit.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

When the government increases the money supply, it increases the amount of money available for spending, which increases aggregate demand and shifts it to the right. When the government raises personal income taxes or repeals an investment tax credit, it reduces the amount of disposable income available for spending, reducing aggregate demand and shifting it to the left. Therefore, options A and C are incorrect, and the correct answer is B.

Aggregate Demand Shifts Right When the Government