ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A $100 increase in taxes
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A $100 decrease in taxes
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A $100 increase in government expenditures
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A $100 increase in government expenditures, coupled with a $100 increase in taxes
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A $100 increase in government expenditures, coupled with a $100 decrease in taxes
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Detailed explanation-1: -The correct option is: C. a $100 increase in government expenditures.
Detailed explanation-2: -Income and Wealth As household wealth increases, aggregate demand typically increases. Conversely, a decline in wealth usually leads to lower aggregate demand.
Detailed explanation-3: -The increase in money supply will increase the purchasing power, and people will demand more quantity of goods, due to which the demand for goods and services will increase, and this increase in demand for goods and services will result in an increase in aggregate demand.
Detailed explanation-4: -Answer and Explanation: Since the long-run aggregate supply curve is not responsive to changes in the price level, a change in the aggregate supply would result from changes in efficiency and productivity. Thus, an increase in productivity will increase the long-run aggregate supply curve to the right.