Ceteris paribus, which of the following would cause the aggregate demand curve to shift to the right?
A)higher personal taxes
B)a rise in consumer confidence
C)reduced stock market wealth
D)a reduction in transfer payments

Question

Ceteris paribus, which of the following would cause the aggregate demand curve to shift to the right?
A)​higher personal taxes
B)​a rise in consumer confidence
C)​reduced stock market wealth
D)​a reduction in transfer payments

Quizplus · Accepted Answer

An increase in consumer confidence leads to an increase in consumption expenditure, which is a component of aggregate demand. This shift will cause the aggregate demand curve to shift to the right.

The other choices would cause a decrease in aggregate demand instead. Higher personal taxes and reduced transfer payments would cause a decrease in disposable income and consumption expenditure, while a reduction in stock market wealth would also cause a decrease in wealth and consumption expenditure.

Ceteris Paribus, Which of the Following Would Cause the Aggregate