Question

Which of the following will shift the aggregate demand curve to the left?

You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers.
A. Interest rates rise.
B. The government reduces personal income taxes.
C. There is an economic boom overseas that raises the incomes of foreign households.
D. The government raises corporate profit taxes.

Answer 1

A. Interest rates rise.

C. There is an economic boom overseas that raises the incomes of foreign households.

Step-by-step explanation:

Option A - It is correct because if the interest rate increases, consumer spending will decline. Therefore, the aggregate demand curve will shift to the left.

Option B - If the government reduces the personal income tax, the consumers will spend more, it will lead the aggregate demand to the right. So, it is wrong.

Option C - Foreign households' income will lead to more savings. Therefore, spending will decline. So, it is the correct statement.

Option D - It is incorrect because corporate profit tax will not consider in the aggregate demand.