An economy’s currency experiences a significant appreciation on foreign exchange markets. At the same time, the domestic government implements a contractionary fiscal policy by raising the basic rate of personal income tax.
Which of the following is the most likely immediate (short-run) impact of these two changes on the country’s aggregate demand (ADADAD) curve?
A shift of the aggregate demand curve to the left
A shift of the aggregate demand curve to the right
A movement down and to the right along the aggregate demand curve
A movement up and to the left along the aggregate demand curve
22 exam-style questions on OCR A Level Economics Aggregate demand. Each one has a worked solution and a mark scheme showing where the marks go.