Which Government Action Will Shift the Aggregate Demand Left

question 25

Multiple Choice

Which government action will shift the aggregate demand left?

• A) a decrease in taxes
• B) a decrease in the money supply
• C) signing a free trade agreement
• D) repealing an import tariff

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Definitions:

Income

Money received, especially on a regular basis, by an individual or business in exchange for providing labor, goods, or services, or through investing.

MPC (Marginal Propensity to Consume)

The proportion of an increase in income that is spent on consumption rather than being saved.

Government Purchases Multiplier

The ratio of change in aggregate economic output to a change in government spending, used to analyze the effect of fiscal policy on the economy.

Aggregate Demand

Total economic need for all goods and services within an economy, pegged at a designated price level during a chosen period.