- In the Figure Above, the Shift in the Aggregate Demand

question 57

Multiple Choice

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In the figure above, the shift in the aggregate demand curve from AD1 to AD3 could be the result of

• A)a rise in the price level.
• B)a tax cut.
• C)an increased expectation of a recession that lowers people's expected future incomes.6
• D)a fall in the price level.
• E)a decrease in the foreign exchange rate.

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Definitions:

Capital Markets

Markets where individuals and institutions trade financial securities, including stocks and bonds, over long periods.

Maturities

The specific dates on which the principal or nominal amounts of financial instruments like bonds or loans are due to be paid to holders.

Short-Term Securities

Financial instruments, such as Treasury bills or commercial paper, that have maturities of one year or less.

Money Markets

Financial markets where short-term debt instruments, typically with maturities of one year or less, are traded.