Consider a Simple Aggregate Expenditure Model Where All Components of Aggregate

question 182

Multiple Choice

Consider a simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption. Which of the following causes the aggregate expenditures curve to shift downwards?

• A) a decrease in taxes
• B) an increase in imports
• C) an increase in government spending
• D) an increase in investment

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Definitions:

Taxpayers

Individuals or entities that are obliged to pay taxes to a governmental authority.

Society Gains

The benefits or improvements experienced by members of a society from economic, social, or environmental changes.

Subsidies

Financial support that governments provide to businesses, individuals, or other governmental entities, usually aimed at economic benefits or promoting certain activities or products.

Ethanol

A biofuel produced from various plant materials, commonly used as a renewable alternative to gasoline.