Figure 12-2
-Refer to Figure 12-2.If the U.S.economy is currently at point K,which of the following could cause it to move to point N?
A)The price level in the United States rises relative to the price level in other countries.
B)Congress passes investment tax incentives.
C)The interest rate rises.
D)Household wealth declines.

Question

Figure 12-2 
-Refer to Figure 12-2.If the U.S.economy is currently at point K,which of the following could cause it to move to point N?
A)The price level in the United States rises relative to the price level in other countries. 
B)Congress passes investment tax incentives. 
C)The interest rate rises. 
D)Household wealth declines.

Quizplus · Accepted Answer

Moving from point K to point N on the aggregate demand curve represents an increase in the quantity of goods and services demanded at the same price level. This can be caused by factors that increase consumption, investment, government spending, or net exports. Among the given options, Congress passing investment tax incentives (B) directly encourages investment by making it more attractive for businesses to invest in new projects, thereby increasing aggregate demand and moving the economy from point K to point N.

Figure 12-2 -Refer to Figure 12-2.If the U.S.economy Is Currently at Point