Which of the Following Would Cause the AD Curve to Shift

question 165

Multiple Choice

Which of the following would cause the AD curve to shift to the left?

• A)A decrease in the real rate of interest
• B)A decrease in the rate of inflation
• C)An increase in government purchases
• D)A decision by the Fed to decrease the nominal interest rate
• E)None of these

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Definitions:

Present Value

Today's value of a future sum of money or sequence of cash flows, calculated based on an agreed-upon rate of return.

Annual Rate

The interest rate for a period of one year, often used to compare the return on investments or the interest cost on loans.

Actuarial Information

Data used by actuaries to calculate and manage risk and uncertainty, often in the insurance and finance industries.

Bond Issuance

The process through which an issuer creates a financial obligation (bond) that must be repaid to investors at a later date.