Which of the Following Events Will Cause the Largest Rightward

question 4

Multiple Choice

Which of the following events will cause the largest rightward shift (as measured horizontally) of the AD curve?

• A) A 15% decrease in the aggregate price level.
• B) A 15% decrease in the nominal wage.
• C) A tax increase.
• D) A 15% increase in the nominal money supply.
• E) A decrease in government spending.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price.

Black Market

An illegal trade of goods or services conducted outside the authorization of the official regulatory framework, often to avoid taxes or due to the illicit nature of the goods.

Price Floors

Minimum legally established prices below which a good or service cannot be sold, typically set by government to protect producers.

Ceiling Prices

are maximum legal prices set by authorities for particular goods or services to prevent them from becoming too expensive during shortages or high demand periods.