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Which of the Following Statements About Fiscal Policy and Aggregate

question 229

Multiple Choice

Which of the following statements about fiscal policy and aggregate demand is (are) correct? I. A reduction in unemployment compensation would increase aggregate demand.
II) An increase in government spending would increase aggregate demand.
III) An increase in government spending would increase aggregate demand and lead to a permanent increase in aggregate output if government spending is implemented when the economy is in long-run equilibrium.


Definitions:

Schachter's Two-factor

A theory of emotion that states emotions are composed of two factors: physiological arousal and cognitive label, both of which are necessary to experience emotion.

James-Lange Theory

A theory of emotion suggesting that emotions occur as a result of physiological reactions to events.

Cannon-Bard Theory

A theory of emotion that proposes emotions and bodily responses occur simultaneously, rather than one causing the other.

Attributions

Explanations or reasons given for why things happen, especially in terms of people's behaviors and outcomes.

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