Greater wealth makes people _____________ willing to spend on consumption,causing __________ the economy's AD curve.
A) more; movement down along
B) more; a rightward shift of
C) less; movement up along
D) less; a rightward shift of

Question

Quizplus · Accepted Answer

When people have greater wealth, they are more willing to spend on consumption, which causes a rightward shift of the economy's aggregate demand (AD) curve. This is because there is an increase in overall demand for goods and services in the economy. The movement down along the AD curve would occur if there was a change in the price level, but this is not related to an increase in wealth. Similarly, if people had less wealth, they would be less willing to spend on consumption, which would cause a leftward shift of the AD curve, not a movement up along it.

Greater Wealth Makes People _____________ Willing to Spend on Consumption,causing