Aggregate Demand Shifts Rightward

Steps:

• Recall aggregate demand (AD) curve shows total spending at price levels; rightward shift means more spending at each price.
• Identify shifters: increases in consumption, investment, government spending, or net exports boost AD right.
• Evaluate options: budget deficit raises government spending or cuts taxes, increasing AD.
• Confirm: other options either decrease spending or move along the curve, not shift it.

Why A is correct:

• A larger budget deficit means more government borrowing and spending (or tax cuts), directly increasing total demand per Keynesian model.

Why the others are wrong:

• B: Higher consumer savings reduces current consumption, shifting AD left.
• C: Rising general price level causes movement up along AD curve, not a shift.
• D: Higher interest rate discourages investment and consumption, shifting AD left.

Final answer: A