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) increase in the money supply.
B) increase in taxes.
C) increase in the price level.
D) decrease 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) increase in the money supply. 
B) increase in taxes. 
C) increase in the price level. 
D) decrease in government spending.

Quizplus · Accepted Answer

A movement from one aggregate demand curve to another, such as from AD₁ to AD₂, typically reflects a change in the overall demand for goods and services in the economy. An increase in the money supply can lead to more spending by consumers and businesses, thus shifting the aggregate demand curve to the right, from AD₁ to AD₂. Increases in taxes or government spending, or an increase in the price level, would not directly cause a shift from one aggregate demand curve to another; they would instead affect the position on a given curve or shift the curve in the opposite direction.

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