Exhibit 10-4 Aggregate supply and demand curves In Exhibit 10-4 which of the following is not consistent with a shift in the aggregate demand curve from AD₁ to AD₂? A) a decrease in consumer spending B) an increase in investment C) an increase in government spending D) an increase in net exports

Question

Quizplus · Accepted Answer

A decrease in consumer spending would cause a shift to the left of the aggregate demand curve, from AD₁ to AD₀, not to AD₂. An increase in investment, an increase in government spending, or an increase in net exports would all cause a shift to the right of the aggregate demand curve, to AD₂.

Exhibit 10-4 Aggregate Supply and Demand Curves