An increase in spending growth causes:
A) an upward movement along the AD curve.
B) a downward movement along the AD curve.
C) a rightward shift of the AD curve.
D) a leftward shift of the AD curve.

Question

Quizplus · Accepted Answer

An increase in spending growth indicates an increase in aggregate demand (AD). This implies that at each price level, people are demanding more goods and services. Therefore, the AD curve shifts to the right to show the increase in demand at all price levels. As a result, there is a rightward shift of the AD curve.

An Increase in Spending Growth Causes