Which of the following is correct?
A)An increase in the money supply causes the interest rate to decrease so that aggregate demand shifts left.
B)An increase in stock prices reduces consumption spending so that aggregate demand shifts left.
C)An increase in the price level causes the exchange rate to rise so that aggregate demand shifts left.
D)A recession in other countries reduces U.S.net exports so that U.S.aggregate demand shifts left.

Question

Quizplus · Accepted Answer

A recession in other countries reduces their demand for goods and services, including those produced in the United States, which reduces U.S. net exports and thus shifts U.S. aggregate demand leftward. An increase in the money supply would lower interest rates and increase spending, shifting aggregate demand rightward. An increase in stock prices would increase wealth and consumer confidence, leading to increased consumption spending and a rightward shift in aggregate demand. An increase in the price level would make U.S. exports more expensive and imports less expensive, leading to a decrease in net exports and a leftward shift in aggregate demand.

Which of the Following Is Correct