Which of the following would likely cause an upward parallel shift in the AE curve and a rightward shift in the AD curve?
A)a decrease in the price level
B)a reduction in government purchases
C)an increase in the price level
D)an increase in the MPC
E)an increase in the business confidence of firms

Question

Quizplus · Accepted Answer

An increase in the business confidence of firms would lead to firms being more willing to invest and expand production, leading to an increase in aggregate demand (AD) as firms would demand more inputs to produce more goods and services. This increase in AD would cause a rightward shift in the AD curve. Additionally, the increase in business confidence would lead to increased consumer confidence, leading to an increase in consumption and investment spending, causing an upward parallel shift in the AE curve.

Which of the Following Would Likely Cause an Upward Parallel