ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A decrease in short-run aggregate supply
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a decrease in aggregate demand
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an increase in short-run aggregate supply
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an increase in aggregate demand
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Detailed explanation-1: -Suppose that a presidential candidate who promised large personal income tax cuts is elected. Which of the following is most likely to occur? An increase in aggregate demand.
Detailed explanation-2: -Answer and Explanation: The correct answer is A. A decrease in price level. Aggregate demand shifts favorably when the money supply increases and enable more consumer purchasing power.
Detailed explanation-3: -This option is correct because the destruction of resources is most likely to cause a leftward shift in the long-run aggregate supply curve. The reason behind this is that the exploitation of resources decreases production and productivity. It increases the price level and decreases real GDP or output in an economy.
Detailed explanation-4: -Which of the following would most likely shift the aggregate demand curve to the right? An increase in stock prices that increases consumer wealth.
Detailed explanation-5: -Aggregate demand is the sum of four components: consumption, investment, government spending, and net exports.