Krugman's Economics For The Ap® Course
3rd Edition
ISBN: 9781319113278
Author: David Anderson, Margaret Ray
Publisher: Worth Publishers
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Question
Chapter 17, Problem 2MCQ
To determine
The question requires us to determine the factor which will shift the aggregate demand curve rightward.
Expert Solution & Answer
Explanation of Solution
An increase in aggregate demand causes the aggregate demand curve to shift to the right. Aggregate demand curve shifts to the right due to the following changes:
- Optimistic expectations of consumers and firms
- An increase in wealth
- An increase in the size of the existing stock of physical capital
- Expansionary fiscal
policy and monetary policy
A decrease in the quantity of money demanded will lower the rate of interest in the market and thus, will increase investment spending.
An increase in investment spending will cause the aggregate demand to increase and thus, shift the aggregate demand curve to the right.
Option “e” is correct.
Chapter 17 Solutions
Krugman's Economics For The Ap® Course
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