A Change in Government Purchases Shifts the Aggregate Demand Curve

question 104

Multiple Choice

A change in government purchases shifts the aggregate demand curve by an amount equal to the

• A) change in consumption * marginal propensity to consume.
• B) change in government purchases * money multiplier.
• C) change in government purchases *spending multiplier.
• D) change in the spending multiplier * change in government purchases.

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Definitions:

Common Shares

are equity securities that represent ownership in a corporation, entitling holders to a share of the corporation's profits through dividends and/or capital appreciation.

Consolidated Financial Statements

Financial statements that show the financial position and results of operations for a parent company and its subsidiaries as one economic entity.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within a business's normal operating cycle if longer.

Acquisition Cost

The total cost incurred to acquire an asset, including purchase price and all other costs necessary to bring the asset to a condition ready for its intended use.