Explain the effect, if any, that each of the following occurrences should have on the aggregate demand curve. a. The Fed lowers the discount rate. b. The price level decreases. c. The federal government increases federal income tax rates in an effort to reduce the federal deficit. d. Pessimistic firms decrease investment spending. e. The inflation rate falls by 3 percent. f. The federal government increases purchases to stimulate the economy.

Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter10: Dynamic Change, Economic Fluctuations, And The Ad-as Model
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Explain the effect, if any, that each of the following occurrences
should have on the aggregate demand curve.
a. The Fed lowers the discount rate.
b. The price level decreases.
c. The federal government increases federal income tax rates in
an effort to reduce the federal deficit.
d. Pessimistic firms decrease investment spending.
e. The inflation rate falls by 3 percent.
f. The federal government increases purchases to stimulate
the economy.

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