Question

Which of the following is most likely to cause a shift to the right in the aggregate demand curve? 
A. Increase in taxes 
B. Decrease in real estate values 
C. Boom in the stock market 


Answer = C 
A boom in the stock market increases the value of financial assets and household wealth. An increase in household wealth increases consumer spending and shifts the aggregate demand curve to the right. 

 

CFA Level I 
"Aggregate Output, Prices, and Economic Growth," Paul R. Kutasovic and Richard G. Fritz 
Section 3.3.1 

 

 

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