Which of the following will result in a rightward shift of the aggregate demand curve?ResponsesAn increase in the income tax rateAn increase in the income tax rateAn increase in exportsAn increase in exportsA decrease in the price levelA decrease in the price levelA decrease in household incomeA decrease in household incomeA decrease in government spending
Question
Which of the following will result in a rightward shift of the aggregate demand curve?ResponsesAn increase in the income tax rateAn increase in the income tax rateAn increase in exportsAn increase in exportsA decrease in the price levelA decrease in the price levelA decrease in household incomeA decrease in household incomeA decrease in government spending
Solution
The aggregate demand curve represents the total quantity of all goods (or services) demanded by the economy at different price levels. A rightward shift of the aggregate demand curve represents an increase in the quantity of goods and services demanded at each price level.
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An increase in the income tax rate: This would generally decrease disposable income and thus decrease consumption, leading to a leftward shift in the aggregate demand curve, not a rightward shift.
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An increase in exports: This would increase the total demand for a country's goods and services, leading to a rightward shift in the aggregate demand curve.
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A decrease in the price level: This would increase the real value of money, leading to increased consumption and investment, and thus a rightward shift in the aggregate demand curve.
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A decrease in household income: This would generally decrease consumption, leading to a leftward shift in the aggregate demand curve, not a rightward shift.
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A decrease in government spending: This would decrease overall demand in the economy, leading to a leftward shift in the aggregate demand curve, not a rightward shift.
So, the options that would result in a rightward shift of the aggregate demand curve are an increase in exports and a decrease in the price level.
Similar Questions
The aggregate demand curve shifts to the right when:Question 1Answera.Consumer confidence increases and interest rates fallb.Government reduces spending and raises taxesc.Firms decrease investment and production levelsd.International trade becomes more restricted
Which of the following will result in a DECREASE in demand (i.e., a leftward shift of the demand curve)?An increase in the price of a complement to the goodAn increase in income, if the good is normalAn increase in the price of a substitute for the goodAn increase in the size of the market
Which of the following would NOT cause a shift in the aggregate demand curve?Question 9Answera.changes in spending by consumersb.changes in spending by foreign buyers c.changes in spending by businessesd.changes in the prices of goods and servicese.changes in spending by the government
Which of the following causes the demand curve to shift to the right?*1 pointA. A reduction in the size of populationB. An increase in the income of the buyerC. The availability of substitutesD. A decrease in price of the good
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