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In the figure above, the shift in the aggregate demand curve from AD1 to AD3 could be the result of
A)a decrease in the foreign exchange rate.
B)a decrease in the real interest rate.
C)an increased expectation of a recession that lowers the expected rate of profit from investment.
D)an increase in the price level.
E)a decrease in the buying power of money.

Question

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In the figure above, the shift in the aggregate demand curve from AD1 to AD3 could be the result of
A)a decrease in the foreign exchange rate. 
B)a decrease in the real interest rate. 
C)an increased expectation of a recession that lowers the expected rate of profit from investment. 
D)an increase in the price level. 
E)a decrease in the buying power of money.

Quizplus · Accepted Answer

An increased expectation of a recession that lowers the expected rate of profit from investment would decrease aggregate demand, shifting the curve from AD1 to AD3.

- In the Figure Above, the Shift in the Aggregate Demand