Which of the Following Will Shift the Aggregate Demand Curve

question 144

Multiple Choice

Which of the following will shift the aggregate demand curve outward?

• A)tax cuts and government spending cuts 
• B)tax increases and government spending increases 
• C)tax cuts and government spending increases 
• D)tax increases and government spending increases

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Definitions:

Deposit Expansion Multiplier

The ratio that quantifies the potential increase in total bank deposits that can result from an initial deposit, through the process of banks lending and creating more deposits.

Reserve Ratio

The fraction of deposits that banks are required to keep on hand and not lend out, as mandated by banking regulations.

Open Market Operations

The buying and selling of government securities in the open market by a central bank to control the supply of money.

Money Supply

The overall amount of available money in an economy, which encompasses cash, coins, and the balances in checking and savings accounts, at a certain moment in time.