(Figure: Shift of the Aggregate Demand Curve) Use Figure: Shift of the Aggregate Demand Curve. A movement from point B on AD1 to point E on AD2 may result from:

A)an increase in consumer optimism
B)an increase in consumer optimism.
C)an increase in consumer pessimism.
D)an increase in consumer pessimism
E)an increase in personal income taxes.
F)an increase in personal income taxes
G)the central bank reducing the quantity of money
H)the central bank reducing the quantity of money.

Question

(Figure: Shift of the Aggregate Demand Curve) Use Figure: Shift of the Aggregate Demand Curve. A movement from point B on AD1 to point E on AD2 may result from:

A)an increase in consumer optimism 
B)an increase in consumer optimism. 
C)an increase in consumer pessimism. 
D)an increase in consumer pessimism 
E)an increase in personal income taxes. 
F)an increase in personal income taxes 
G)the central bank reducing the quantity of money 
H)the central bank reducing the quantity of money.

Quizplus · Accepted Answer

An increase in consumer optimism would lead to an increase in consumption and therefore an increase in aggregate demand, shifting the AD curve to the right from AD1 to AD2. None of the other options listed would lead to such a shift.