If the government wished to shift aggregate demand to the right, it might:
A) fund more "shovel-ready" infrastructure projects around the country.
B) increase income taxes.
C) pressure the Fed to decrease the money supply.
D) cut funding for the Environmental Protection Agency.

Question

Quizplus · Accepted Answer

Funding infrastructure projects would create jobs and stimulate economic growth, shifting aggregate demand to the right. Increasing income taxes would decrease disposable income and decrease aggregate demand, while pressuring the Fed to decrease the money supply would likely lead to higher interest rates and decreased consumer spending. Cutting funding for the Environmental Protection Agency would have no direct impact on aggregate demand.

If the Government Wished to Shift Aggregate Demand to the Right