Identify which expenditure category each of the following will directly impact, and also which direction the U.S. aggregate demand curve will shift as a result. a. Incomes increase abroad. b. Interest rates decrease. c. Congress passes a permanent tax cut. d. Firms become more optimistic about the outlook for the economy. e. Stocks traded on the NASDAQ market lose 40 percent of their value in one month's time

Identify which expenditure category each of the following will directly impact, and also which direction the U.S. aggregate demand curve will shift as a result. a. Incomes increase abroad. b. Interest rates decrease. c. Congress passes a permanent tax cut. d. Firms become more optimistic about the outlook for the economy. e. Stocks traded on the NASDAQ market lose 40 percent of their value in one month's time

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter20: Aggregate Demand And Supply

Section: Chapter Questions

Problem 7SQ

See similar textbooks

Similar questions

Consumption spending was $150$⁢150 billion, investment spending was $40$⁢40 billion, government spending was $50$⁢50 billion, spending on exports was $42$⁢42billion, and spending on imports was $35$⁢35 billion. The price level increases, resulting in a decline in investment spending by 30%30%. Consumption spending decreases by 10%10%.If other factors stay at the same level, determine aggregate demand after the price level increased. Enter your answer in the box below.
If investment increases by $50 billion, by how much will aggregate demand change? Aggregate demand will _______. A. increase by less than $50 billion because there will be fewer goods and services produced for consumption expenditure B. increase by more than $50 billion because the increase in aggregate income induces an increase in consumption expenditure C. probably decrease by $50 billion, but it depends on the change in aggregate supply D. increase by exactly $50 billion because investment is a component of aggregate demand
In order to break stagflation, the government has to increase expenditure on food subsidies in the form of food vouchers, unemployment benefits or allowances, wages subsidy to increase household consumption expenditure and boost up the AD. With increased consumption expenditure, aggregate demand will rise, which would send a signal to the aggregate supply (AS) to raise production. This will create a positive effect, which will bring the economy out of recession. Show this in a graph.
Which of the following would increase aggregate demand? A) Increase in taxation. B) Increase in savings. C) Decrease in consumption spending. D) Increase in government spending.