Aggregate demand ________ and shifts the AD curve ________ when ________.
A)decreases;leftward;government expenditure increases
B)increases;rightward;taxes increase
C)decreases;leftward;foreign incomes decrease
D)decreases;rightward;government expenditure increases
E)increases;leftward;taxes decrease

Question

Quizplus · Accepted Answer

Decreases in foreign incomes (such as a recession in another country) would decrease aggregate demand, causing the AD curve to shift leftward. Option A and D incorrectly state that an increase in government expenditure would cause a leftward shift, when in fact it would cause a rightward shift. Option B incorrectly states that an increase in taxes would cause an increase in aggregate demand, when in fact it would cause a decrease. Option E incorrectly states that a decrease in taxes would cause a leftward shift, when in fact it would cause a rightward shift.

Aggregate Demand ________ and Shifts the AD Curve ________ When

Aggregate Demand and Shifts the AD Curve When