Which of the following would cause a positive aggregate demand shock, but leave the aggregate supply curve unaffected?
A)A medical report confirming that improved health for Canadian workers caused fewer lost days of production.
B)A substantial increase in world oil prices.
C)A severe drought lasting for six months that destroys agricultural and forestry production.
D)An improvement in the computer literacy of workers.
E)A free trade agreement between Canada and the United States that leads Canadian businesses to increase investment expenditures.

Question

Quizplus · Accepted Answer

A free trade agreement between Canada and the United States that leads Canadian businesses to increase investment expenditures would increase demand for goods and services, causing a positive aggregate demand shock. However, it would not affect the aggregate supply curve.

Which of the Following Would Cause a Positive Aggregate Demand