Which of the following will result in a rightward shift of the aggregate demand curve?Multiple select question.A decrease in wages and other input pricesAn increase in consumption spendingAn increase in investmentA decrease in the price of valuable commoditiesAn increase in business taxes
Question
Which of the following will result in a rightward shift of the aggregate demand curve?Multiple select question.A decrease in wages and other input pricesAn increase in consumption spendingAn increase in investmentA decrease in the price of valuable commoditiesAn increase in business taxes
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 signifies an increase in the quantity of goods and services demanded at each price level.
Here are the options that would result in a rightward shift of the aggregate demand curve:
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An increase in consumption spending: When consumers spend more, the aggregate demand increases. This is because consumption is a major component of aggregate demand. So, an increase in consumption spending would shift the aggregate demand curve to the right.
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An increase in investment: Investment is another component of aggregate demand. When businesses increase their investment, it means they are buying more goods and services, which increases aggregate demand. Therefore, an increase in investment would also shift the aggregate demand curve to the right.
The other options would not result in a rightward shift of the aggregate demand curve:
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A decrease in wages and other input prices: This would likely lead to an increase in aggregate supply, not aggregate demand. Lower input costs allow firms to produce more at each price level, shifting the aggregate supply curve to the right.
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A decrease in the price of valuable commodities: This would likely have an ambiguous effect on aggregate demand. On one hand, lower commodity prices could increase consumption and investment, shifting aggregate demand to the right. On the other hand, it could decrease the wealth of commodity producers, potentially decreasing consumption and shifting aggregate demand to the left.
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An increase in business taxes: This would likely decrease aggregate demand. Higher taxes reduce disposable income for consumers and decrease after-tax profits for businesses, both of which would likely decrease consumption and investment, shifting the aggregate demand curve to the left.
Similar Questions
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 will result in a shift in the aggregate supply curve?Question 30Select one:a.changes in spending by businesses. b.changes in spending by foreign buyers.c.changes in spending by the government.d.changes in spending by consumers.e.changes in input prices.
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
The aggregate supply curve will shift up when which of the following occurs?Question 20Select one:a.an increase in the expected price levelb.a decrease in unemployment benefitsc.a decrease in firm's markup over labour costsd.All of the above.e.None of the above.
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