Which of the Following Sets of Events Clearly Would Lead

question 173

Multiple Choice

Which of the following sets of events clearly would lead to a decrease in aggregate demand if the events occurred simultaneously?

• A) Taxes are cut, giving the government less revenue while household debt levels rise.
• B) Interest rates fall, giving savers less interest income while government spending on research is cut.
• C) There is a strong expansion in the economy of the country's main trading partner at the same time that the country's currency appreciates.
• D) Debt levels in the country rise at the same time that the country's currency appreciates.

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Definitions:

Research and Development

The process of innovating and improving products or services through scientific investigation, experimentation, and technological advancement.

Operating Expenses

Costs associated with the day-to-day operations of a business that are not directly tied to the production of goods or services.

Current Assets

Resources anticipated to be turned into cash, liquidated, or utilized within a 12-month period or over the length of the business's operational cycle, whichever duration is more extended.

Fixed Assets

Long-term tangible assets used in the operations of a business that are not expected to be converted to cash in the short term, such as buildings, machinery, and equipment.