Question

12Which of the following would most likely shift the aggregate demand curve to the right? an...

12Which of the following would most likely shift the aggregate demand curve to the right?

an increase in stock prices that increases consumer wealth

increased fear that a recession will cause workers to lose their jobs

an increase in personal income tax rates

a reduction in household borrowing because of tighter lending practices

13-

The immediate-short-run aggregate supply curve is

downsloping.

upsloping.

vertical.

horizontal.

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Answer #1

12. Option A.

  • An increase in stock prices shifts the aggregate demand curve to the right.
  • When people want more stocks, they would like to purchase them more when their wealth increases.
  • This will push the prices of stocks and the demand curve moves to the right.

13. Option D.

  • The immediate short run aggregate supply curve is horizontal.
  • The horizontal shape of immediate short run aggregate supply curve illustrates that prices are set as per agreement and they remain constant and do not change through out the curve.
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