The AD curve shifts to the right with a __________ in government purchases (G)or a __________ in taxes.
A) rise; rise
B) rise; fall
C) fall; rise
D) fall; fall

Question

Quizplus · Accepted Answer

An increase in government purchases (G) or a decrease in taxes will lead to an increase in aggregate demand (AD), causing the AD curve to shift to the right. This is because both policies will increase disposable income, leading to an increase in consumption spending.

The AD Curve Shifts to the Right with a __________