-In the above figure, the shift from AD? to AD? might have been the result of
A) an increase in government expenditure.
B) a decrease in taxes.
C) an increase in the quantity of money.
D) All of the above answers are correct.

Question

-In the above figure, the shift from AD? to AD? might have been the result of
A) an increase in government expenditure. 
B) a decrease in taxes. 
C) an increase in the quantity of money. 
D) All of the above answers are correct.

Quizplus · Accepted Answer

The shift from AD1 to AD2 in an aggregate demand curve can be caused by any factor that increases aggregate demand, including an increase in government expenditure, a decrease in taxes (which increases consumers' disposable income and thus their spending), and an increase in the quantity of money (which can lower interest rates and increase spending on investment and consumption). All these actions increase the overall demand in the economy, shifting the aggregate demand curve to the right.

-In the Above Figure, the Shift from AD? to AD