The aggregate demand curve will shift to the right when which of the following occurs?
A)a reduction in the money supply
B)a reduction in consumer confidence
C)a rise in the price level
D)a reduction in taxes
E)a decrease in the price level

Question

Quizplus · Accepted Answer

A reduction in taxes would increase disposable income for consumers and increase business profits, leading to an increase in consumption and investment, thus shifting the aggregate demand curve to the right. The other options would lead to a decrease in aggregate demand and shift the curve to the left.

The Aggregate Demand Curve Will Shift to the Right When