Which One of the Following Is TRUE About the Effects

question 14

Multiple Choice

Which one of the following is TRUE about the effects of fiscal policy?

• A)A decrease government spending will increase aggregate supply.
• B)A tax change does not have any direct or indirect effects on aggregate demand.
• C)A decrease in government spending will decrease aggregate demand.
• D)An increase in government spending will reduce aggregate demand.

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Definitions:

Domestic System

A production system prevalent before the Industrial Revolution, where manufacturing was done in homes rather than in centralized factories.

Industrial Revolution

The Industrial Revolution was a period of major industrialization that took place during the late 1700s and early 1800s, leading to significant technological, socio-economic, and cultural changes.