If there is an aggregate demand shock:
A) the IS curve shifts to the right.
B) the IS curve shifts to the left.
C) there is rightward movement along the IS curve.
D) there is leftward movement along the IS curve.
E) Not enough information is given.

Question

Quizplus · Accepted Answer

An aggregate demand shock can either increase or decrease demand, causing the IS curve to shift either right or left. Without specifying the nature of the shock, it's unclear which direction the IS curve will shift.

If There Is an Aggregate Demand Shock