Question

A movement from point A on AD1 to point C on AD2 could have been the result of: an increase in consumer optimism. the central bank reducing the quantity of money. an increase in personal income taxes. an increase in consumer pessimism.

Answer 1

Answer:

An increase in consumer optimism.

Explanation:

Assuming that the shift form AD1 to AD2 is rightwards and hence results in an increased quantity demanded by consumers at any price level.

Increased consumer optimism results in an outward demand shift and a new equilibrium. When people are optimistic about futures they tend to spend more freely with higher marginal propensity to consume per individual as they believe they would be able to reap benefits in the future.

All the other options cause a leftward shift and thus reduce the quantity demanded at any and each price level.

Hope this helps.