In the basic aggregate demand and aggregate supply model, which of the following would cause deflation?...
In the basic aggregate demand and aggregate supply model, which of the following would cause deflation? An increase in
A.
government purchases
B.
oil prices
C.
the expected future price level
D.
income taxes
Homework Answers
Ans. d. income taxes
Deflation means fall in price level. Increase in income taxes would
reduce consumption and hence AD. This would reduce price
level>
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In the basic aggregate demand and aggregate supply model, which
of the following would cause deflation?...
Which one of the following factors will cause the investment demand curve to increase?
QUESTION 15 Which one of the following factors will cause the investment demand curve to increase? a. Firms are finding themselves with a lot of excess capacity. b. Oil prices rise, triggering an increase in the cost of operating machinery and tools. c. The government raises business taxes significantly. d. Business executives become more optimistic about future sales and profits. QUESTION 16 Which one of the following will cause an upward shift of the aggregate expenditures schedule? a. An increase in real GDP (income) b. An increase in the...
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In the aggregate demand and aggregate supply model, a. the factors that cause the individual supply...
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a. Which of the following events would likely cause the decrease
in aggregate demand?
Personal consumption falls as workers become concerned about
future employment prospects.
Imports decrease due to increased foreign prices.
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utilized.
b. A decrease in aggregate demand is of policy concern due to
the increase in the:
unemployment rate.
productivity of workers.
price level.
c. Which policy action should the federal government enact?
Increase personal income tax rates
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a. Which of the following events would likely cause the decrease
in aggregate demand?
Personal consumption falls as workers become concerned about
future employment prospects.
Imports decrease due to increased foreign prices.
Gross investment increases as capital units become fully
utilized.
b. A decrease in aggregate demand is of policy concern due to
the increase in the:
unemployment rate.
productivity of workers.
price level.
c. Which policy action should the federal government enact?
Increase personal income tax rates
Decrease real...
2. Use the model of aggregate demand and short-run aggregate supply to explain how each of the following would affect real GDP and the price level in the short run. a. an increase in government purchases b.a reduction in nominal wages c. a major improvement in technology d. a reduction in net exports
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