Which of the following shifts the aggregate demand curve rightward?
A) a decrease in the quantity of money and an increase in interest rates
B) a tax cut
C) expectations that future incomes will fall
D) a decrease in government expenditure

Question

Quizplus · Accepted Answer

A tax cut increases disposable income, which leads to an increase in consumption, investment, and net exports, shifting the aggregate demand curve rightward. A decrease in the quantity of money and an increase in interest rates (A) decrease investment and consumption, shifting the aggregate demand curve leftward. Expectations that future incomes will fall (C) decrease consumption and shift the aggregate demand curve leftward. A decrease in government expenditure (D) decreases aggregate demand by decreasing government purchases, shifting the aggregate demand curve leftward.

Which of the Following Shifts the Aggregate Demand Curve Rightward