The aggregate demand curve will shift rightward when there is:
A) a decrease in government spending.
B) a decrease in incomes abroad.
C) a tax increase.
D) the expectation that future consumer income will rise.

Question

Quizplus · Accepted Answer

The expectation that future consumer income will rise will lead to an increase in consumption expenditures and therefore increase aggregate demand. A decrease in government spending (A) would lead to a decrease in aggregate demand. A decrease in incomes abroad (B) would decrease exports and decrease aggregate demand. A tax increase (C) would decrease disposable income and decrease consumption expenditures, leading to a decrease in aggregate demand.

The Aggregate Demand Curve Will Shift Rightward When There Is