What Happens to Aggregate Demand When Government Spending and the Taxes

question 106

Multiple Choice

What happens to aggregate demand when government spending and the taxes to pay for it both rise by the same amount?

• A)Aggregate demand falls by the amount of the government spending.
• B)There is no effect.
• C)Aggregate demand rises by the amount of the government spending.
• D)Aggregate demand rises by the amount of the government spending times the multiplier.

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Definitions:

Socialization

The process by which individuals learn and adopt the norms, values, behaviors, and social skills appropriate to their society.

Imprinting

A process occurring during a critical period in the development of an organism, in which that organism responds to a stimulus in a manner that will afterward be difficult to modify.

Assimilation

The cognitive process by which an individual incorporates new information or experiences into their existing framework of knowledge or schema.

Embryonic Stage

A critical phase of prenatal development that spans from implantation of the zygote in the uterine wall through the eighth week, where major organs and structures begin to form.