Which of the following changes shifts the AD curve to the right?
A)a temporary decrease in government purchases
B)a decline in the nominal money supply
C)an increase in corporate taxes
D)an increase in consumer confidence

Question

Quizplus · Accepted Answer

An increase in consumer confidence would shift the AD curve to the right because it would increase consumer spending, causing an increase in aggregate demand. A decrease in government purchases (choice A) would shift the AD curve to the left as it would decrease the total demand in an economy. A decline in nominal money supply (choice B) would shift the AD curve to the left as it would decrease the demand in the economy. An increase in corporate taxes (choice C) would also shift the AD curve to the left as it would decrease the investment of firms, leading to a decrease in aggregate demand.

Which of the Following Changes Shifts the AD Curve to the Right