What Happens to Aggregate Demand When Government Spending and the Taxes

question 109

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:

Cognitive Infocommunications

An interdisciplinary field that focuses on the study and design of systems for human-computer interaction and communication, integrating cognitive science and information communication technologies.

Information Communication Technology

Encompasses all digital technologies that facilitate the capturing, processing, storage, and exchange of information in various formats.

Virtual Reality

A computer-generated simulation of a three-dimensional environment that can be interacted with in a seemingly real or physical way by a person using special electronic equipment.

One-Way Communication

A form of communication where information is transmitted from a sender to a receiver without expecting or receiving any feedback or response.