Which of the Following Actions Would Cause the Aggregate Demand

question 83

Multiple Choice

Which of the following actions would cause the aggregate demand curve to shift to the left?

• A) an increase in consumer spending caused by a cut in the personal income tax rate
• B) an increase in government spending caused by increased spending on highways and bridge construction
• C) a decrease net export spending caused by an appreciation of the home currency
• D) an increase in exports caused by an increase in economic activity in the European Union

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Definitions:

Pareto Optimal

A state of allocation of resources from which it is impossible to make any one individual better off without making at least one individual worse off.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are available to all members of a society, such as public parks and national defense.

Private Consumption

The total amount of goods and services consumed by individuals in a household.

Pareto Optimal

A situation where resources are distributed in such a way that improving one person's condition inevitably leads to the detriment of another individual.