-In the above figure, the shift from AD₁ to AD₂ might have been the result of A) an increase in government expenditure. B) a decrease in taxes. C) an increase in the quantity of money. D) All of the above answers are correct.

Question

Quizplus · Accepted Answer

The shift from AD₁ to AD₂ in an economic model can be caused by any factor that increases aggregate demand. This includes an increase in government expenditure, a decrease in taxes, and an increase in the quantity of money. All these actions inject more money into the economy, encouraging spending and investment, thus shifting the aggregate demand curve to the right.

-In the Above Figure, the Shift from AD1 to AD2

-In the Above Figure, the Shift from AD₁ to AD₂