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

Quizplus · Accepted Answer

A movement from AD₀ to AD₁, which represents an increase in aggregate demand, could be caused by a decrease in taxes. This is because lower taxes increase disposable income, leading to higher consumer spending and thus shifting the aggregate demand curve to the right.

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