What Effect Would an Increase in Investment,combined with an Increase

question 54

Multiple Choice

What effect would an increase in investment,combined with an increase in imports,have on aggregate demand (AD) ?

• A)AD would increase.
• B)AD would stay the same.
• C)AD could either increase or decrease, depending on which change was of a greater magnitude.
• D)AD would decrease.

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Definitions:

Normal Good

A type of good for which demand increases as the income of consumers increases, and decreases when consumer income decreases.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, opposite of a normal good.

Normal Good

A good for which demand increases as the income of the consumer increases.

Price Elasticity

An indicator of the alteration in the amount of a product that is either demanded or supplied, as a result of variations in its market price.