Question

 Question 31

 If tax declines

  aggregate demand shifts to the left

  aggregate demand shifts to the right

  real GDP declines by a movement along the same aggregate demand

  real GDP Increases by a movement along the same aggregate demand

 Question 32

 How does inflation affect wages?

 Inflation increases real wages

 Inflation decreases real wages

 Inflation does not influence real wages

 Inflation decreases nominal wages

 Question 33

 Consumption function will shift down if

  disposable income will go up

  house prices will go down

  house prices will go up

  disposable income will go down

Answer 1

31) 4th option is the answer : Real GDP increases by a movement along the same aggregate demand.

Explanation: Lower income tax rates increase disposable income and savings which in turn increases the spending power of consumers leading to increase in demand of goods and services.

32) 2nd option is the answer : Inflation decreases real wages

Explanation : Demand for workers falls when Demand for goods and services falls due to high inflation.

33) 4th option is the answer - disposable income will go down.

Explanation : Demand for goods and services falls with the fall in Disposable income as savings goes down. Example : Higher income tax rate eads to fall in disposable income and leads to lower savings