Everything else equal, an increase in consumption by the public would tend to cause:
A) a leftward shift in AD.
B) a fall in the price level.
C) a decrease in GDP.
D) a rightward shift of AD.
E) no change is AD.

Question

Quizplus · Accepted Answer

An increase in consumption by the public would lead to an increase in aggregate demand (AD), represented by a rightward shift of the AD curve. This is because aggregate demand is composed of consumption, investment, government spending, and net exports. An increase in consumption directly increases aggregate demand.

Everything Else Equal, an Increase in Consumption by the Public