Which of the following shifts aggregate demand to the right?
A)Federal government reduces purchases of new weapons.
B)The Bank of Canada buys bonds in the open market.
C)The price level falls.
D)Net exports fall.

Question

Quizplus · Accepted Answer

When the Bank of Canada buys bonds in the open market, it increases the money supply and lowers interest rates, which encourages borrowing and spending, thus increasing aggregate demand.

Note: Choices A, C, and D all shift aggregate demand to the left.

Which of the Following Shifts Aggregate Demand to the Right