The aggregate demand curve
A) shifts leftward when the price level increases and shifts rightward when the price level falls.
B) shifts rightward when taxes are decreased.
C) shifts rightward when foreign incomes decrease and shifts leftward when foreign incomes increase.
D) shifts leftward when taxes are decreased.

Question

Quizplus · Accepted Answer

A decrease in taxes increases consumers' disposable income, leading to higher spending and thus shifting the aggregate demand curve rightward.

The Aggregate Demand Curve