Which of the Following Decreases Aggregate Demand and Shifts the AD

question 7

Multiple Choice

Which of the following decreases aggregate demand and shifts the AD curve leftward?

• A) A tax cut
• B) An increase in government expenditures on goods and services
• C) A decrease in potential GDP
• D) The Reserve Bank increasing the interest rate
• E) An increase in the quantity of money

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Definitions:

Real Rate of Return

The rate of return on an investment after adjusting for inflation, representing the actual growth in purchasing power.

Corporate Stocks

Equity stakes in corporations, allowing ownership and potentially receiving dividends.

Treasury Bonds

Long-term investment instruments issued by the government that pay periodic interest until expiration, at which point the face value is paid to the investor.

Treasury Bills

Short-term government securities issued at a discount from par value and mature without interest payments, offering a return upon maturity.