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

Question

Quizplus · Accepted Answer

When the Fed buys bonds in the open market, it increases the money supply, which leads to lower interest rates and increased investment and consumption. This shift in aggregate demand to the right.

Note:
A) Congress reducing purchases of new weapon systems would lead to a decrease in government spending, which would shift aggregate demand to the left.
C) A fall in price level would lead to a decrease in consumption and investment, shifting aggregate demand to the left.
D) A fall in net exports would lead to a decrease in the demand for domestic goods and services, shifting aggregate demand to the left.

Which of the Following Shifts Aggregate Demand to the Right