Which of the following will cause consumption, and as a result, aggregate demand, to shift to the right?
A)an optimistic business forecast of future income growth
B)increased consumer wealth
C)an increase in consumer confidence
D)a tax cut
E)All of the above.

Question

Quizplus · Accepted Answer

All of the choices listed will cause consumption to increase and shift aggregate demand to the right. If businesses are optimistic about future income growth, they are more likely to invest and hire, which increases consumer incomes and spending. Increased consumer wealth also leads to more spending as people have more disposable income. A rise in consumer confidence means people feel more secure about their financial future and are more likely to spend money. Lastly, a tax cut will leave people with more money to spend or save, both of which contribute to higher aggregate demand.

Which of the Following Will Cause Consumption, and as a Result