An aggregate demand curve
A) shifts to the right when a non-price level change increases total planned real expenditures.
B) shifts to the right when a non-price level change decreases total planned real expenditures.
C) shifts to the right when the price level falls.
D) does not shift to the right or to the left.

Question

Quizplus · Accepted Answer

An aggregate demand curve shifts to the right when a non-price level change increases total planned real expenditures, such as an increase in government spending, a decrease in taxes or an increase in exports. This means that at every price level, there is a higher quantity demanded of goods and services in the economy, leading to an increase in real GDP. As a result, the aggregate demand curve slopes downward, indicating that higher prices lead to a lower quantity of real GDP demanded.

An Aggregate Demand Curve