Which of the following shifts the aggregate demand curve rightward?
A) an increase in the quantity of money
B) an increase in the exchange rate
C) a decrease in the price level
D) an increase in the tax rate

Question

Quizplus · Accepted Answer

An increase in the quantity of money would shift the aggregate demand curve rightward because it increases overall spending in the economy. This is because consumers and businesses have more access to funds, which means they will be more likely to spend money on goods and services. A higher level of spending leads to a greater demand for products, causing the demand curve to shift to the right.

None of the other options (B, C, D) would shift the aggregate demand curve rightward. An increase in the exchange rate (B) would make imports cheaper and exports more expensive, thereby decreasing net exports and shifting the aggregate demand curve leftward. A decrease in the price level (C) would lead to lower overall spending (since people would have to spend less to buy the same amount of goods), which would shift the aggregate demand curve leftward. An increase in the tax rate (D) would decrease the overall amount of disposable income and spending, leading to a leftward shift in the aggregate demand curve.

Which of the Following Shifts the Aggregate Demand Curve Rightward