Which of the following will shift the aggregate demand curve outward?
A)tax cuts and government spending cuts
B)tax increases and government spending increases
C)tax cuts and government spending increases
D)tax increases and government spending increases

Question

Which of the following will shift the aggregate demand curve outward?
A)tax cuts and government spending cuts 
B)tax increases and government spending increases 
C)tax cuts and government spending increases 
D)tax increases and government spending increases

Quizplus · Accepted Answer

Tax cuts increase disposable income, leading to higher consumer spending, and government spending increases directly add to aggregate demand. Both of these policies give people more money to spend, so aggregate demand will shift outward. Tax increases and government spending cuts would have the opposite effect, reducing aggregate demand.

Which of the Following Will Shift the Aggregate Demand Curve