Changes in which of the following factors can shift the AD curve?
A) net exports
B) government purchases
C) the money supply
D) b and c
E) a,b,and c

Question

Quizplus · Accepted Answer

All three factors listed can shift the AD curve. An increase in net exports will shift AD to the right, while a decrease in net exports will shift it to the left. An increase in government purchases will also shift AD to the right, and a decrease in government purchases will shift it to the left. Finally, an increase in the money supply will lower interest rates, which will increase investment and consumption, thereby shifting AD to the right. Conversely, a decrease in the money supply will raises interest rates and decrease investment and consumption, shifting AD to the left.

Changes in Which of the Following Factors Can Shift the AD