Which of the following causes a movement along the aggregate demand curve?
A) a fall in wages
B) an increase in the price level
C) an increase in government spending
D) an increase in the money supply

Question

Quizplus · Accepted Answer

An increase in the price level would cause movement along the aggregate demand curve, as it would decrease the quantity demanded for goods and services. This is due to the fact that high prices decrease consumers' purchasing power, causing them to demand fewer goods and services.

Choices A, C, and D would shift the aggregate demand curve, rather than causing movement along it. A fall in wages would increase aggregate demand by decreasing production costs and increasing firms' ability to supply goods and services, shifting the aggregate demand curve to the right. An increase in government spending and an increase in the money supply would both increase aggregate demand by increasing the amount of money in circulation in the economy, shifting the aggregate demand curve to the right.

Which of the Following Causes a Movement Along the Aggregate