ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Lowers personal income taxrs
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Increases the money supply
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Repeals an investment tax credit
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All of the above are correct
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Detailed explanation-1: -If the AD curve shifts to the right, then the equilibrium quantity of output and the price level will rise. If the AD curve shifts to the left, then the equilibrium quantity of output and the price level will fall.
Detailed explanation-2: -A reduction in taxes or an increase in transfer payments causes an increase in consumer wealth and investments, driving the real GDP up and in turn shifting aggregate demand rightward to AD2. The same effect is felt when the government increases its spending on something like healthcare.
Detailed explanation-3: -An increase in government spending or a cut in taxes that leads to a rise in consumer spending can also shift AD to the right.
Detailed explanation-4: -The aggregate supply curve shifts to the right as productivity increases or the price of key inputs falls, making a combination of lower inflation, higher output, and lower unemployment possible.