A Decline in U.S.wealth Would Tend to Cause

question 146

Multiple Choice

A decline in U.S.wealth would tend to cause:

• A) long-run aggregate supply to increase.
• B) aggregate demand to decrease.
• C) short-run aggregate supply to increase.
• D) long-run aggregate supply to decrease.
• E) aggregate demand to increase.

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Definitions:

Fiscal Policy

Government spending and taxation decisions designed to control inflation, reduce unemployment, improve the general welfare of citizens, and encourage economic growth.

Increased Taxes

A financial situation where a government raises the rates of taxes, affecting individuals or businesses.

Reduced Government Spending

A situation where the government decreases its expenditure in various sectors to manage its budget, often affecting public services and investments.

Expansionary Monetary Policy

Government actions to increase the money supply in an effort to cut the cost of borrowing, which encourages business decision makers to make new investments, in turn stimulating employment and economic growth.