Aggregate demand shifts right if at a given price level
A)taxes rise and shifts left if the money supply increases.
B)taxes rise and shifts right if the money supply increases.
C)taxes fall and shifts left if the money supply increases.
D)taxes fall and shifts right if the money supply increases.

Question

Quizplus · Accepted Answer

When taxes fall, consumers have more disposable income, which leads to an increase in consumption and investment spending, which shifts aggregate demand to the right. Increase in the money supply also leads to an increase in consumption and investment spending, which also shifts aggregate demand to the right. Hence, aggregate demand shifts right if taxes fall and if the money supply increases.

Aggregate Demand Shifts Right If at a Given Price Level