ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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encourage savings and to delay consumer spending and business Investment, shifting AS right
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make money more expensive so overseas exports will be cheaper in other countries due to the depreciation
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encourage savings and to delay consumer spending and business Investment, shifting AD left
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increase the confidence in th economy because the higher rates show a strong er economy and will help appreciate the currency
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Detailed explanation-1: -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-2: -There are two types of expansionary policies – fiscal and monetary. Expansionary monetary policy focuses on increased money supply, while expansionary fiscal policy revolves around increased investment by the government into the economy.
Detailed explanation-3: -In this case, expansionary fiscal policy using tax cuts or increases in government spending can shift aggregate demand to AD1, closer to the full-employment level of output.
Detailed explanation-4: -Monetary Policy to Curb Inflation A contractionary policy aims to reduce the supply of money within an economy by lowering the prices of bonds and rising interest rates. Thus, consumption falls, prices fall and inflation slows down. A contractionary monetary policy is one common method of managing inflation.