Multiple Choice
Refer to Figure 26-2. Which of the following events would shift the demand curve from D1 to D2?
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3. The Market Forces of Supply and Demand
Shifts in the Demand Curve
Multiple Choice
Which of the following events shifts the aggregate demand curve rightward?
A
An increase in consumer confidence leading to higher household spending
B
A fall in net exports due to a stronger domestic currency
C
A rise in interest rates that discourages investment
D
A decrease in government spending on public goods
Verified step by step guidance1
Understand that the aggregate demand (AD) curve represents the total quantity of goods and services demanded across all levels of an economy at different price levels.
Recall that factors which increase overall spending in the economy shift the AD curve to the right, while factors that reduce spending shift it to the left.
Analyze each event: An increase in consumer confidence typically leads to higher household spending, which increases consumption and shifts AD rightward.
A fall in net exports due to a stronger domestic currency reduces demand for domestic goods abroad, shifting AD leftward.
A rise in interest rates discourages investment spending, and a decrease in government spending reduces public expenditure; both shift AD leftward.
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