Which government policy will shift the aggregate demand curve to the right? A) a decrease in taxes B) an increase in interest rates C) a decrease in the money supply D) a decrease in government transfer payments

A) a decrease in taxes

Explanation:

When tax policies are enacted by the government, it can affect spending and investment. When there is tax cut, there is increase in consumption demand while tax increase will lead to decrease in consumption demand.

A look at the Aggregate Demand, one will discover that consumption and investment are components of it; therefore changing either will shift the Aggregate Demand curve as a whole.

Therefore, decrease in taxes, leads to increase in consumption, which shifts the Aggregate Demand curve to the RIGHT.

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