Question

Which of the following will result in a rightward shift of the aggregate demand curve?

a) Increase in taxes
b) Decrease in government spending
c) Increase in consumer confidence
d) Decrease in exports

Answer 1

An increase in consumer confidence would result in a rightward shift of the aggregate demand curve.

Step-by-step explanation:

In terms of the aggregate demand (AD) curve, a rightward shift indicates an increase in aggregate demand. Out of the options given, an increase in consumer confidence would result in a rightward shift of the aggregate demand curve.

When consumer confidence increases, people are more likely to spend money, which increases consumer spending and overall demand in the economy. This shift leads to a higher quantity of output and a higher price level compared to the original equilibrium.