When drawn against the real interest rate, the output demand curve shifts to the right when
A) future income increases.
B) future taxes increase.
C) the real interest rate decreases.
D) both future and current taxes increase.
E) the real interest rate increases.

Question

Quizplus · Accepted Answer

An increase in future income raises expected future consumption, leading to an increase in current consumption and investment, thus shifting the output demand curve to the right.

When Drawn Against the Real Interest Rate, the Output Demand