A shift of the AD-curve to the left can be caused by
A. a decrease in taxes
B. an increase in business and consumer confidence
C. an increase in nominal money supply
D. a decrease in government transfer payments
E. a decrease in money demand
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The AD-curve has a negative slope since
A. firms will produce less if they have to lower their prices
B. lower prices mean higher real wages so firms can no longer afford to produce as many goods and services
C. a decrease in the price level increases real money balances, leading to lower interest rates and increased spending
D. lower prices drive up the demand for goods since buyers fear future market shortages
E. lower prices increase consumer confidence, which encourages spending
A shift of the AD-curve to the right could be caused by
A. a decrease in taxes
B. a decrease in government transfer payments
C. an increase in money demand
D. a decrease in defense spending
E. both A) and C)
An increase in aggregate demand can be caused by
A. an increase in government expenditures
B. an increase in nominal money supply
C. a decrease in taxes
D. an increase in business and consumer confidence
E. all of the above
To maintain a fixed level of aggregate demand, a central bank would have to respond to a tax increase by
A. increasing reserve requirements for banks
B. restricting money supply
C. buying bonds in the open market
D. selling bonds in the open market
E. both A) and B)
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