Figure 14.1
-Figure 14.1 shows three aggregate demand curves. A movement from curve AD₁ to curve AD₂ could be caused by a(n)
A) decrease in the money supply.
B) increase in taxes.
C) decrease in the price level.
D) increase in government spending.

Question

Figure 14.1
-Figure 14.1 shows three aggregate demand curves. A movement from curve AD₁ to curve AD₂ could be caused by a(n)
A) decrease in the money supply. 
B) increase in taxes. 
C) decrease in the price level. 
D) increase in government spending.

Quizplus · Accepted Answer

An increase in government spending would shift the aggregate demand curve to the right, causing a movement from AD₁ to AD₂. Option A is incorrect because a decrease in the money supply would shift the aggregate demand curve to the left. Option B is incorrect because an increase in taxes would also shift the aggregate demand curve to the left. Option C is incorrect because a decrease in the price level would not cause a movement along the aggregate demand curve.

Figure 14.1 -Figure 14.1 Shows Three Aggregate Demand Curves. a Movement from Movement