Fiscal Policy Affects Aggregate Demand Because

question 55

Multiple Choice

Fiscal policy affects aggregate demand because:

• A) government purchases is a category of aggregate demand.
• B) taxes affect disposable income and so consumption.
• C) taxes affect corporate spending and so investment.
• D) all of the above.

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Definitions:

Stock B

Refers to a classification of stocks that are considered as a less volatile investment than Stock A; often paying dividends.

Security Market Line

A line graph that represents the relationship between risk (beta) and the expected return of the market and various securities.