- Refer to Figure 18.1.Which of the following would most likely cause a shift from AD₁ to AD₂? A)An increase in transfer payments because of a recession. B)An increase in the tax rate. C)A decrease in the money supply through open market operations.

Question

Quizplus · Accepted Answer

An increase in transfer payments during a recession would increase disposable income, leading to higher consumer spending and shifting the aggregate demand curve from AD1 to AD2.