Which of the following changes shifts the AD curve up and 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 leads to a higher likelihood of consumer spending, which increases aggregate demand and shifts the AD curve up and to the right. A temporary decrease in government purchases would likely have the opposite effect and shift the AD curve down and to the left. A decline in the nominal money supply would also reduce aggregate demand and shift the AD curve down and to the left. An increase in corporate taxes would decrease profits and investment, leading to a decrease in aggregate demand and a shift of the AD curve down and to the left.

Which of the Following Changes Shifts the AD Curve Up