What fiscal policy tools are used to shift the aggregate demand curve?
A) Government spending and interest rates
B) Taxes and interest rates
C) Government spending and taxes
D) Taxes and employment rates

Question

Quizplus · Accepted Answer

Government spending and taxes are the two fiscal policy tools that can be used to shift the aggregate demand curve. If the government increases spending or cuts taxes, this will increase aggregate demand, shifting the curve to the right. If the government decreases spending or raises taxes, this will decrease aggregate demand, shifting the curve to the left. Interest rates and employment rates are not directly related to fiscal policy tools for shifting the aggregate demand curve.

What Fiscal Policy Tools Are Used to Shift the Aggregate