The aggregate demand curve
A) shifts rightward when the price level increases and leftward when the price level falls.
B) shifts rightward when taxes are decreased.
C) shifts rightward when foreign incomes decrease and shifts leftward when foreign incomes increase.
D) does not shift, unlike market demand curves.

Question

Quizplus · Accepted Answer

The aggregate demand curve shifts rightward when taxes are decreased because lower taxes increase consumers' disposable income, leading to higher spending and thus increasing aggregate demand.

The Aggregate Demand Curve