What could cause the aggregate demand curve to shift to the right?
A)A fall in the price level.
B)A fall in people's real balances.
C)An increase in income levels abroad.
D)An increase in interest rates.

Question

Quizplus · Accepted Answer

An increase in income levels abroad would increase demand for exports, which would increase the demand for domestic goods and services, shifting the aggregate demand curve to the right.

Note: A fall in the price level (option A) or a fall in people's real balances (option B) would shift the aggregate demand curve to the left as it would lead to a decrease in consumption and investment spending. An increase in interest rates (option D) would also shift the aggregate demand curve to the left as it would discourage investment spending and increase the cost of borrowing for consumers.

What Could Cause the Aggregate Demand Curve to Shift to the Right