The Aggregate Demand Curve Would Shift to the Right as a Result

question 74

Multiple Choice

The aggregate demand curve would shift to the right as a result of

• A)a drop in the price level.
• B)tax increases.
• C)a drop in the foreign exchange value of the dollar.
• D)a decrease in the amount of money in circulation.

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Definitions:

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Loanable Funds

The money available for borrowing in the financial markets, corresponding to savings that are lent out for investment.

Liquidity Preference Theory

A theory suggesting that people prefer to hold their wealth in liquid form for ease of spending but are willing to accept less liquidity for a higher return.

Interest Rate

The percentage of a sum of money charged for its use, often expressed as an annual percentage rate.