Aggregate demand AD AD, 45 Income Select the option that describes a possible scenario shown by the shift from ADo to AD, in Figure 3. Select one: O Rise in tax rate and rise in government spending. O Rise in tax rate and fall in government spending. O Fall in tax rate and fall in government spending. O Fall in tax rate and rise in government spending.

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Look at Figure 3. Assume this aggregate demand diagram represents an economy with government,
where:
a = exogenous consumption
b = the marginal propensity to consume
t = the tax rate
|= investment
G = government spending
Y = income
Figure 3
Aggregate
AD,
demand
AD,
45°
Income
Select the option that describes a possible scenario shown by the shift from AD, to AD, in Figure 3.
Select one:
O Rise in tax rate and rise in government spending.
O Rise in tax rate and fall in government spending.
O Fall in tax rate and fall in government spending.
O Fall in tax rate and rise in government spending.
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Transcribed Image Text:Look at Figure 3. Assume this aggregate demand diagram represents an economy with government, where: a = exogenous consumption b = the marginal propensity to consume t = the tax rate |= investment G = government spending Y = income Figure 3 Aggregate AD, demand AD, 45° Income Select the option that describes a possible scenario shown by the shift from AD, to AD, in Figure 3. Select one: O Rise in tax rate and rise in government spending. O Rise in tax rate and fall in government spending. O Fall in tax rate and fall in government spending. O Fall in tax rate and rise in government spending. ( Previous page Next page > PHILIPS
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