Which of the Following Factors Will Cause the Aggregate Demand

question 130

Multiple Choice

Which of the following factors will cause the aggregate demand curve to shift to the right?

• A) reduction in the aggregate price level
• B) reduction in personal income taxes
• C) increase in interest rates
• D) decrease in foreign income

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Definitions:

Operating Profit

Income derived from normal business operations after subtracting operating expenses and cost of goods sold, also known as operating income.

Capacity

The maximum amount that something can contain or produce.

Variable Costs

Costs that change in proportion to the amount of goods produced or the volume of sales, like labor and materials.

Contribution Margin Ratio

The ratio that represents what percentage of sales contributes to the covering of fixed costs, calculated by subtracting variable costs from sales revenue and dividing the result by sales revenue.