Question

"All of these would cause a shift to the left of the demand curve EXCEPT for

a.) an increase in taxes
b.) reproduction in exports
c.) increased money supply
d.) declining consumer spending

Answer 1

An increase in taxes, a reduction in exports, and a decline in consumer spending would all cause a leftward shift in the demand curve. However, an increased money supply would typically result in a rightward shift, as it allows for greater consumer spending.

Step-by-step explanation:

The student asked which of the given options would not cause a shift to the left of the demand curve. An increase in taxes on consumer income usually leads to decreased consumption, thus shifting the Aggregate Demand (AD) curve leftward which can be a tool for controlling inflation. Similarly, a reduction in exports will decrease a country's GDP, leading to a leftward shift in the AD curve, and a decline in consumer spending directly translates to less demand for goods and services, shifting the demand curve to the left. In contrast, an increased money supply typically leads to more consumption as there is more money available for consumers to spend, shifting the AD curve to the right.