The Figure Above Shows an Economy's Aggregate Demand Curve and Aggregate

question 92

Multiple Choice

The figure above shows an economy's aggregate demand curve and aggregate supply curve.
-Suppose the shift from AD₀ to AD₁ and from AS₀ to AS₁ in the figure above is the result of fiscal policy.Which of the policies below could lead to these shifts?
i.An increase in government expenditure
ii.A tax cut
iii.A decrease in government expenditure
iv.A tax increase

• A)iv only
• B)iii and iv
• C)i and iv
• D)i and ii
• E)i only

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Definitions:

Schema

Cognitive frameworks or concepts that help individuals organize and interpret information, based on their experiences and prior knowledge.

Commonality Corollary

This principle, originating from George Kelly's personal construct psychology, suggests that for two people to communicate effectively, they must have some constructs in common.

Personal Construct

Refers to the ways individuals uniquely perceive, interpret, and understand their world and experiences, according to George Kelly's personal construct theory.

Permeable Construct

Permeable Construct refers to a concept or theory that can be easily influenced or penetrated by external factors or ideas.