Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 34, Problem 2QCMC
To determine
Relation between government purchases, tax, and aggregate demand.
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Students have asked these similar questions
One way that the government can increase aggregate demand is by:
A. reducing income taxes.
B. increasing the interest rates.
C. reducing government spending.
D. increasing business taxes.
1
What effect does an increase in government
spending have on the aggregate demand
curve in an economy?
A. The aggregate demand curve shifts to the
left.
B. The aggregate demand curve becomes
steeper.
C. The aggregate demand curve shifts to the
right.
D. The aggregate demand curve becomes
flatter.
Chapter 34 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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Similar questions
- 21. If taxes a. increase, then consumption increases, and aggregate demand shifts leftward. b. increase, then consumption decreases, and aggregate demand shifts rightward. c. decrease, then consumption increases, and aggregate demand shifts rightward. d. decrease, then consumption decreases, and aggregate demand shifts leftward.arrow_forwardIf taxes are lowered, we can expect supply-side economists to support the decision to do so because a. government revenues will increase in the long run. b. government spending will decrease in the long run. c. the government will spend more in the short run. d. economic growth cannot occur without it.arrow_forwardNonearrow_forward
- ANSWER it correctly please. I ll rate accordingly. Typed answer only and do fast. Don't stuck.arrow_forwardGive typing answer with explanation and conclusionarrow_forwardExplain the effect of tax increases on savings on aggregate supply using the model of the macroeconomy. Price Level (average price per unit of output) AS Output (real GDP per period) The results are that a. the equilibrium rate of output (Click to select) b. the equilibrium price level (Click to select) ✓ c. unemployment (Click to select) V ADarrow_forward
- By decreasing government spending and aggregate demand, the policy ________ the price level and ________ equilibrium real GDP, ceteris paribus. Select one: a. decreases; increases b. increases; decreases c. increases; increases d. decreases; decreasesarrow_forwardEqual increases in government purchases and in net taxes have equal but opposite effects on the level of real GDP demanded. a. True b. Falsearrow_forwardIf the government wants to expand aggregatedemand, it can _________ government purchases or_________ taxes.a. increase; increaseb. increase; decreasec. decrease; increased. decrease; decreasearrow_forward
- A cut in personal taxes on households’ income: A shifts the aggregate demand curve to the left. B. shifts the aggregate demand curve to the right. C. moves the economy along the aggregate demand curve . D. has no effect.arrow_forwardAssuming the economy is in long run and the govt implemnents a tax cut of $420 Billion, there is no crowding out, and marginal propensity to consume is 0.9 what's the initial and total effect of the tax reduction on aggregate demand? Is there a formula to calculate this?arrow_forwardSomeone answer this question ASAP without explanantionA tax cut shifts aggregate demand A. by less than the tax cut. B. by the same amount as the tax cut. C. None of the options are correct. D. by more than the amount of the tax cut.arrow_forward
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