Exhibit 14-5 Aggregate demand curves

-In Exhibit 14-5,which one of the following could cause the U.S.aggregate demand curve to move from AD₃ to AD₂?
A) Greater resource availability.
B) Nonfluctuating resource availability.
C) A recession in Japan.
D) An increase in government grants for AIDS awareness programs.
E) An expectation that future income will rise.

Question

Exhibit 14-5 Aggregate demand curves
 
-In Exhibit 14-5,which one of the following could cause the U.S.aggregate demand curve to move from AD₃ to AD₂?
A) Greater resource availability. 
B) Nonfluctuating resource availability. 
C) A recession in Japan. 
D) An increase in government grants for AIDS awareness programs. 
E) An expectation that future income will rise.

Quizplus · Accepted Answer

A recession in Japan would reduce demand for U.S. exports, decreasing net exports and shifting the aggregate demand curve from AD₃ to AD₂. Greater or nonfluctuating resource availability, an increase in government grants for AIDS awareness programs, and an expectation of future income growth would not directly affect the aggregate demand curve.

Exhibit 14-5 Aggregate Demand Curves