Aggregate demand shifts right if
A)taxes rise or stock prices rise.
B)taxes rise or stock prices fall.
C)taxes fall or stock prices rise.
D)taxes fall or stock prices fall.

Question

Quizplus · Accepted Answer

If taxes fall, households and firms have more disposable income, which increases consumption and investment spending, thus increasing aggregate demand. If stock prices rise, households and firms feel wealthier and more confident, leading to higher consumption and investment spending, which also increases aggregate demand.

Aggregate Demand Shifts Right If