A Rightward Shift of the Aggregate Demand Curve Leads to

question 132

Multiple Choice

A rightward shift of the aggregate demand curve leads to

• A) a leftward shift of the short-run Phillips curve.
• B) a rightward shift of the short-run Phillips curve.
• C) an upward movement along the short-run Phillips curve.
• D) a downward movement along the short-run Phillips curve.
• E) neither a movement along nor a shift in the short-run Phillips curve.

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Definitions:

Consumption Spending

The total amount of money spent by households and consumers on durable goods, nondurable goods, and services.

Income

Money received, especially on a regular basis, by an individual or business in exchange for providing labor, goods, or services, or through investing.

MPC (Marginal Propensity to Consume)

The proportion of an increase in income that is spent on consumption rather than being saved.

Government Purchases Multiplier

The ratio of change in aggregate economic output to a change in government spending, used to analyze the effect of fiscal policy on the economy.