Figure 14.1
-Figure 14.1 shows three aggregate demand curves. A movement from curve AD1 to curve AD0 could be caused by an)
A)increase in the money supply.
B)decrease in taxes.
C)increase in the price level.
D)decrease in government spending.

Question

Figure 14.1
-Figure 14.1 shows three aggregate demand curves. A movement from curve AD1 to curve AD0 could be caused by an)
A)increase in the money supply. 
B)decrease in taxes. 
C)increase in the price level. 
D)decrease in government spending.

Quizplus · Accepted Answer

A decrease in government spending would lead to a decrease in aggregate demand, shifting the curve from AD1 to AD0.

Figure 14.1 -Figure 14.1 Shows Three Aggregate Demand Curves. a Movement from Movement