If President Obama Wanted to Decrease Aggregate Demand, Which of the Following

question 97

Multiple Choice

If President Obama wanted to decrease aggregate demand, which of the following would he tend to favor?

• A)An increase in government spending, because it will increase the size of the public sector.
• B)A decrease in government spending, because it keeps the public sector small.
• C)An increase in transfer payments, because it has a larger multiplier than tax changes.
• D)An increase in taxes, because it would not make the public sector smaller.

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Definitions:

Dopamine Antagonist

A type of drug that blocks dopamine receptors, reducing the effect of dopamine in the brain.

Antianxiety Agents

Medications or substances used to reduce or alleviate anxiety and its related disorders.

Benzodiazepines

A class of psychoactive drugs used primarily for treating anxiety, insomnia, and several other conditions, known for their tranquilizing effects.

Alcohol

Alcohol typically refers to ethanol, a psychoactive substance found in drinks like beer, wine, and spirits, affecting the central nervous system with both stimulating and depressing effects.