Question

What is an appropriate government response to shift aggregate demand back to ADf? Select all that...

What is an appropriate government response to shift aggregate demand back to ADf?

Select all that apply:

  • enact tax increases

  • increase direct government spending

  • decrease direct government spending

  • enacting tax cuts

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Option a and c are correct. Increase in tax rate and decrease in government spending leads to backward shift of aggregate demand curve.

Increase in tax rate reduces the disposable income, after tax wages, after tax investment return will decline. It results fall in production and output level. Thereby it reduces consumption, investment and net exports. It reduces the aggregate demand for good and services

Decrease in government spending will increase income inequality. It will also shify AD curve leftward.

Option b and d are wrong. Because increase in goverment spending and tax cuts increase aggregate demand and shifts AD curve rightward

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Short-run contractionary fiscal policy would result in: AD moving to the right. AS moving to the...
Short-run contractionary fiscal policy would result in: AD moving to the right. AS moving to the right. AD moving to the left. AS moving to the left. Stimulus checks and tax changes are all examples of Monetary Policy Fiscal Policy Contractionary Policy Expansionary Policy If the federal government decide a contractionary fiscal policy is ​necessary, what changes should they make in government spending or​ taxes? The federal government should enact policies that decrease government spending and decrease taxes. The federal...
Which government action will shift the aggregate demand left? Select one: a. a decrease in taxes...
Which government action will shift the aggregate demand left? Select one: a. a decrease in taxes b. repealing an import tariff c. signing a free trade agreement d. a decrease in the money supply
Name some economic events which could cause aggregate demand to shift. (select all that apply) A....
Name some economic events which could cause aggregate demand to shift. (select all that apply) A. A relative increase in prices in foreign countries B. Artificial Intelligence used to manufacture industrial robots C. A sudden decrease in population D. A change in consumer confidence E. New discoveries of oil in the Arctic
An example of the multiplier effect is when the government increases government spending initially by $100...
An example of the multiplier effect is when the government increases government spending initially by $100 billion, and total income in the economy increases by less than $100 billion. an increase in the price level leads to a shift in the aggregate demand curve. the government increases government spending initially by $100 billion, and total income in the economy increases by more than $100 billion. an increase in government spending leads to a decrease in private investment. short-run aggregate supply...
Describe whether the following changes cause the aggregate demand curve to increase (shift right), decrease (shift...
Describe whether the following changes cause the aggregate demand curve to increase (shift right), decrease (shift left), or neither. (a) The price level increases. (b) Investment decreases. (c) Imports decrease and exports increase. (d) The price level decreases. (e) Consumption increases. (f) Government purchases decrease. Describe whether the following changes cause the long-run aggregate supply curve to increase (shift right), decrease (shift left), or neither. (a) The price level increases. (b) The stock of capital in the economy increases. (c)...
If an economy at full employment experiences a fall in aggregate demand, what can the government...
If an economy at full employment experiences a fall in aggregate demand, what can the government do to help the situation? increase government spending decrease government spending increase taxes on individuals and businesses reduce taxes on individuals and businesses
1. The crowing out effect of government spending will be less pronounced if Select one: a....
1. The crowing out effect of government spending will be less pronounced if Select one: a. consumption spending is more sensitive to changes in the interest rate b. government borrows mostly in the international financial markets c. none of the answers is correct d. equilibrium GDP is further below potential GDP 2. Monetary policy response to the Coronavirus crisis in Australia can be expected to Select one: a. prevent, among other things, large increase in unemployment b. slow down aggregate...
If the MPC in an economy is .8, government could shift the aggregate demand curve rightward...
If the MPC in an economy is .8, government could shift the aggregate demand curve rightward by $100 billion by: decreasing taxes by $25 billion. increasing government spending by $25 billion. increasing government spending by $80 billion. decreasing taxes by $100 billion.
Choose that all apply. What are the determinants of demand that shift the demand curve? Select...
Choose that all apply. What are the determinants of demand that shift the demand curve? Select one or more: a. Consumer Income b. Input Price c. Tax d. Price of substitue goods
In an aggregate demand-aggregate supply diagram, equal decreases in government spending and taxes will Group of...
In an aggregate demand-aggregate supply diagram, equal decreases in government spending and taxes will Group of answer choices not affect the AD curve. increase the equilibrium GDP. shift the AD curve to the left. shift the AD curve to the right.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT