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In: Economics

State and Local Governments and Aggregate Demand. The aggregate demand curve shifts to the right if...

State and Local Governments and Aggregate Demand. The aggregate demand curve shifts to the right if

A.

the money supply decreases

B.

the price level increases

C.

taxes increase

D.

state governments increase their spending

Solutions

Expert Solution

The right answer is option D. state governments increase their spending

Explanation: The aggregate demand curve shifts towards the right when there is an increase in demand at the given price level. When the state governments increase their spending, the aggregate demand for goods and services increase at the exisiting price level. So, the aggregate demand curve shifts towards the right.

Rahul Sunny answered 2 years ago
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