CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

Which of the following will cause aggregate demand to increase?
A. An increase in the money supply
B. An increase in taxes
C. A decrease in the price level
Explanation: An increase in the money supply will increase aggregate demand. An increase in taxes lowers AD; any change in the price level moves along the same curve.

User Contributed Comments 4

User Comment
Kuki increase in AD means AD shifts rightward.
Criticull AD increases with a price decrease. A movement along it to the right (assumes downward sloping) is still an increase in aggregate quantity demanded, even though there isn't a shift, which would indicate an increase in AD at all price levels.
mmark wrong Criticull. AD does not change when price level changes. The amount demanded changes instead, not AD itself which is the demand curve.
kseeba17 Why does the CFA insist on using terribly vague terms. "Movement along vs Shift of D/S curve", < that is how every economics book I've ever read refers to it, its not rocket science
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