Refer to Figure 9.2 for the following questions.
Figure 9.2

-If the economy is currently at point K in Figure 9.2, which of the following could cause it to move to point N?
A)The price level in Australia rises relative to the price level in other countries.
B)The government introduces investment tax incentives.
C)The interest rate rises.
D)Household wealth declines.

Question

Refer to Figure 9.2 for the following questions.
Figure 9.2
 
-If the economy is currently at point K in Figure 9.2, which of the following could cause it to move to point N?
A)The price level in Australia rises relative to the price level in other countries. 
B)The government introduces investment tax incentives. 
C)The interest rate rises. 
D)Household wealth declines.

Quizplus · Accepted Answer

Investment tax incentives encourage businesses to invest more, which increases aggregate demand. This can shift the economy from a lower point (K) to a higher point (N) on the aggregate demand curve, representing economic growth or an increase in the overall level of economic activity.

Refer to Figure 9.2 for the Following Questions