Which of the following shifts aggregate demand to the right?
A)a decrease in the money supply
B)increases in the profitability of capital due perhaps to technological progress.
C)the repeal of an investment tax credit
D)a decrease in the price level

Question

Quizplus · Accepted Answer

Option B states that an increase in profitability of capital due to technological progress would shift the aggregate demand to the right as it will increase the willingness of firms to invest and increase their output, which will ultimately increase the demand in the economy.

Option A, decreasing the money supply, would shift the aggregate demand to the left as it will decrease the purchasing power of individuals and firms.

Option C, the repeal of an investment tax credit, would shift the aggregate demand to the left as it will decrease the willingness of firms to invest, reducing their output, and ultimately decreasing the demand in the economy.

Option D, a decrease in the price level, would also shift the aggregate demand to the left as it will decrease the revenue and profits of firms, causing them to reduce their output and investment, thus eventually decreasing the demand in the economy.

Which of the Following Shifts Aggregate Demand to the Right