Figure 14.1
-Figure 14.1 shows three aggregate demand curves. A movement from curve AD₂ to curve AD₁ could be caused by a(n)
A) increase in the money supply.
B) increase in taxes.
C) increase in the price level.
D) increase in government spending.

Question

Figure 14.1
-Figure 14.1 shows three aggregate demand curves. A movement from curve AD₂ to curve AD₁ could be caused by a(n)
A) increase in the money supply. 
B) increase in taxes. 
C) increase in the price level. 
D) increase in government spending.

Quizplus · Accepted Answer

A movement from AD₂ to AD₁ represents a decrease in aggregate demand, which can be caused by an increase in taxes, as this would reduce consumers' disposable income and decrease consumption.

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