Question

quizelt Aggregate demand shifts right if at a given price level a. taxes rise and shifts left if the money supply increases. b. taxes rise and shifts right if the money supply increases. c. taxes fall and shifts left if the money supply increases. d. taxes fall and shifts right if the money supply increases.

Answer 1

The correct answer is D. taxes fall and shifts right if the money supply increases.

Step-by-step explanation:

The aggregate demand curve has a negative slope in relation to prices, this means that keeping all other factors constant, in an economy when the price level drops, the quantity of goods and services demanded tends to increase.

If the income of the consumers grows, the demand will be increasing, which will cause the shift to the right of the demand curve since at the same price the quantity demanded will be greater.

Similarly, the curve will shift to the right if demand increases due to a positive change in tastes or fashion or because the prices of products that can replace it increase.