The aggregate demand curve will shift rightward when there is: Question 25 optio

Question

The aggregate demand curve will shift rightward when there is:

Question 25 options:

a) a decrease in government spending.
b) a decrease in incomes abroad.
c) a tax increase.
d) the expectation that the future consumer income will rise.

The negative slope of the aggregate demand curve is caused by:

Question 24 options:

a) the real wealth effect, the interest rate effect, and the price level effect.

b) the real wealth effect, the money supply effect, and the net export effect.

c) the interest rate effect, the net exports effect, and the real GDP effect.

d) the real wealth effect, the interest rate effect, and the net exports effect

Explanation / Answer

25. d) the expectation that the future consumer income will rise.

When consumers expect that their income will rise in future then they demand more goods today and as a result, aggregate demand increases and shifts the AD curve rightwards.

26. d) the real wealth effect, the interest rate effect, and the net exports effect

AD curve slopes downward due to real wealth effect, the interest rate effect, and the open economy effect.

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