Aggregate demand ________ and shifts the AD curve ________ when ________.
A)decreases;leftward;the price level rises
B)increases;leftward;taxes increase
C)increases;rightward;foreign incomes increase
D)decreases;rightward;government expenditure increases
E)increases;rightward;taxes increase

Question

Quizplus · Accepted Answer

An increase in foreign incomes leads to an increase in demand for domestically produced goods and services, which increases aggregate demand and shifts the AD curve to the right. Option A is incorrect because a decrease in aggregate demand leads to a shift of the AD curve to the left, not the right. Option B and E are incorrect because an increase in taxes leads to a decrease in disposable income, which decreases aggregate demand and shifts the AD curve to the left. Option D is incorrect because an increase in government expenditure leads to an increase in aggregate demand and a shift of the AD curve to the right, not the left.

Aggregate Demand ________ and Shifts the AD Curve ________ When

Aggregate Demand and Shifts the AD Curve When