In a Certain Year the Aggregate Amount Demanded at the Existing

question 47

Multiple Choice

In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases.Full-employment GDP is $120 billion.To obtain price level stability under these conditions the government should:

• A)increase tax rates and reduce government spending.
• B)discourage personal saving by reducing the interest rate on government bonds.
• C)increase government expenditures.
• D)encourage private investment by reducing corporate income taxes.

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Verb Agree

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