Which of the following would likely cause an upward parallel shift in the AE curve and a rightward shift in the AD curve?
A)an increase in the business confidence of firms
B)a reduction in government purchases
C)an increase in the MPC
D)a decrease in the price level
E)an increase in the price level

Question

Quizplus · Accepted Answer

An increase in the business confidence of firms will likely cause an upward parallel shift in the AE curve as firms increase their spending and investment, and a rightward shift in the AD curve as aggregate demand increases due to increased consumption and investment. None of the other options listed would cause this specific combination of shifts.

Which of the Following Would Likely Cause an Upward Parallel