Question

1.

An increase in aggregate demand will increase

Group of answer choices

Both real output and the price level

The real domestic output and have no effect on the price level

The price level and have no effect on real domestic output

The price level and decrease the real domestic output

2.

The aggregate supply curve shows:

Group of answer choices

The quantity of goods and services that will be produced at various price levels.

The relative price of goods in one country compared to another.

The amount of expenditures at a given GDP level.

The price and quantity of good produced in a market.

3.

An increase in taxes will most likely

Group of answer choices

Decrease aggregate demand

Increase aggregate supply

Decrease aggregate supply

Increase aggregate demand

4.

Expansionary fiscal policy includes:

Group of answer choices

Increasing government spending

Reducing taxes

Increasing money supply

Both reducing taxes and increasing government spending

Answer 1

1) Answer is A.

Increase in demand will increase the output and price in short run. In long run output not increase but price will increase.

2) Answer is A.

Aggregate supply curve shows how many goods and services could be supplied at various level of prices.

3) Answer is A.

Taxes will decrease the income of consumer and decrease in income will decrease the demand.

4) Answer is A.

Fiscal policy is implemented by the central government. When spending is increased by central government it called expansionary fiscal policy and when spending are decreased by government it called contractionary fiscal policy.

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