If the Government Increased Autonomous Net Taxes by $60 Million

question 2

Multiple Choice

If the government increased autonomous net taxes by $60 million and increased its own purchases by the same amount, we would expect the net effect of these actions to be

• A)an increase in aggregate demand, which is a rightward shift of the aggregate demand curve
• B)an increase in aggregate demand, which is a leftward shift of the aggregate demand curve
• C)a decrease in aggregate demand, which is a rightward shift of the aggregate demand curve
• D)a decrease in aggregate demand, which is a leftward shift of the aggregate demand curve
• E)to leave the aggregate demand curve unchanged

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Definitions:

Relative Frequency Histogram

A type of histogram that displays the relative frequencies, which are the proportions or percentages, of data points in consecutive intervals.

Class Interval

A range of values within which data points in a dataset are grouped for the purposes of frequency distribution.

Frequency Distribution

A summary of how often each value in a set of data occurs.

Relative Frequency Distributions

Statistical tools used to describe the number of times a particular value occurs in relation to the total number of values.