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Figure: Aggregate Demand
-(Figure: Three Aggregate Demand Curves) Figure: Three Aggregate Demand Curves Consider the three aggregate demand curves shown in the graph.Movement from Point A to Point D represents:
A) an increase in spending growth from 2% to 3%.
B) an increase in spending growth from 4% to 6%.
C) an increase in real GDP growth,but not spending growth.
D) an increase in inflation,but not spending growth.

Question

Use the following to answer questions 
Figure: Aggregate Demand 
-(Figure: Three Aggregate Demand Curves) Figure: Three Aggregate Demand Curves  Consider the three aggregate demand curves shown in the graph.Movement from Point A to Point D represents:
A) an increase in spending growth from 2% to 3%. 
B) an increase in spending growth from 4% to 6%. 
C) an increase in real GDP growth,but not spending growth. 
D) an increase in inflation,but not spending growth.

Quizplus · Accepted Answer

Movement from Point A to Point D represents an increase in spending growth from 4% to 6%. This is because the equilibrium level of output has increased along with the price level, indicating that aggregate demand has increased due to an increase in spending growth. Option A is incorrect because the increase in spending growth is from 4% to 6%, not from 2% to 3%. Option C is incorrect because the increase in real GDP growth is due to an increase in aggregate demand, which is caused by an increase in spending growth. Option D is incorrect because there is no evidence of an increase in inflation, as the price level has only increased due to the increase in aggregate demand.

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