The aggregate demand curve
A) shifts rightward when taxes are decreased.
B) shifts rightward when foreign incomes decrease and shifts leftward when foreign incomes increase.
C) shifts rightward when the price level increases and leftward when the price level falls.
D) does not shift, unlike market demand curves.

Question

Quizplus · Accepted Answer

A decrease in taxes increases consumers' disposable income, leading to higher consumption and thus shifting the aggregate demand curve to the right.

The Aggregate Demand Curve