ECONOMICS
AGGREGATE SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Shift aggregate supply outwards so more is supplied at each price
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Shift aggregate supply inwards so less is supplied at each price
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Shift aggregate demand outwards so more is demanded at each price
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Shift aggregate demand inwards so less is demanded at each price
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Detailed explanation-1: -Second, if the government cuts taxes or increases transfer payments, households’ disposable income rises, and they will spend more on consumption. This rise in consumption will in turn raise aggregate demand. Fiscal policy also changes the composition of aggregate demand.
Detailed explanation-2: -The aggregate demand curve tends to shift to the left when total consumer spending declines. 2 Consumers might spend less because the cost of living is rising or because government taxes have increased. Consumers may decide to spend less and save more if they expect prices to rise in the future.
Detailed explanation-3: -Here, the key lesson is that a shift of the aggregate demand curve to the right leads to a greater real GDP and to upward pressure on the price level. Conversely, a shift of aggregate demand to the left leads to a lower real GDP and a lower price level.
Detailed explanation-4: -A rightward shift in the AD curve occurs when there happens an increase in the consumption expenditure, investment expenditure, government spending, and net exports.