-The aggregate demand curve in the figure above shifts rightward if
A) taxes are raised.
B) potential GDP increases.
C) government expenditure increases.
D) the money wage rate falls.
E) the Reserve Bank raises the interest rate.

Question

-The aggregate demand curve in the figure above shifts rightward if
A) taxes are raised. 
B) potential GDP increases. 
C) government expenditure increases. 
D) the money wage rate falls. 
E) the Reserve Bank raises the interest rate.

Quizplus · Accepted Answer

Government expenditure increases lead to a rightward shift in the aggregate demand curve because they directly increase overall demand in the economy by injecting more money into it, stimulating economic activity.

-The Aggregate Demand Curve in the Figure Above Shifts Rightward