An Example of a Negative Aggregate Demand Shock Is ________

question 65

Multiple Choice

An example of a negative aggregate demand shock is ________.

• A) a global carbon cap-and-trade program
• B) a global financial crisis
• C) a decrease in the price of oil
• D) thermonuclear war

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Definitions:

Spending Multiplier

the ratio of the change in total national income to the initial change in spending that brought it about, illustrating how initial spending leads to increased total spending in an economy.

Aggregate Spending

Aggregate spending is the total amount of spending in an economy, including consumption, investment, government expenditures, and net exports during a specific period.

Autonomous Saving

The portion of savings of an economy that is independent of income levels, often related to baseline savings by consumers and companies.

Aggregate Expenditure

Represents the total spending on goods and services in an economy, including consumption, investment, government purchases, and net exports during a specific period.