Which of the following pairs of policies shift aggregate demand in the same direction?
A)A tax increase and an increase in the money supply.
B)A transfer payment decrease and an increase in the money supply.
C)A reduction in government purchases and decline in the money supply.
D)An increase in government purchases and a decline in the money supply.

Question

Which of the following pairs of policies shift aggregate demand in the same direction?
A)​A tax increase and an increase in the money supply.
B)​A transfer payment decrease and an increase in the money supply.
C)​A reduction in government purchases and decline in the money supply.
D)​An increase in government purchases and a decline in the money supply.

Quizplus · Accepted Answer

Both a reduction in government purchases and a decline in the money supply would shift aggregate demand to the left, as they both effectively reduce the amount of spending in the economy.

Which of the Following Pairs of Policies Shift Aggregate Demand