Which of the following would cause the aggregate demand curve to shift to the right?
A) An increase in the price level
B) A decrease in the price level
C) An increase in government purchases
D) An increase in taxes
E) An increase in the interest rate.

Question

Quizplus · Accepted Answer

An increase in government purchases will increase aggregate expenditure and thus shift the aggregate demand curve to the right. A decrease in the price level (B) would result in movement along the aggregate demand curve and not shift it. An increase in the price level (A) would shift the aggregate demand curve to the left. An increase in taxes (D) would decrease disposable income, consumption, and investment, and thus shift the aggregate demand curve to the left. An increase in the interest rate (E) would decrease investment and consumption, and thus shift the aggregate demand curve to the left.

Which of the Following Would Cause the Aggregate Demand Curve