In an Aggregate Expenditures Diagram Equal Increases in Government Spending

question 205

Multiple Choice

In an aggregate expenditures diagram equal increases in government spending and in lump-sum taxes will:

• A)shift the aggregate expenditures line downward.
• B)shift the aggregate expenditures line upward.
• C)not affect the aggregate expenditures line.
• D)reduce the equilibrium GDP.

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Definitions:

Vertical Axis

In a graph or chart, the vertical line that usually shows the scale of values for the variable measured.

Utility Function

A mathematical representation in economics that explains how individuals rank preferences or choices to maximize satisfaction.

Indifference Curves

Indifference curves represent combinations of goods between which a consumer is indifferent, showing the trade-offs in consumption that yield equal satisfaction.

Horizontal Axis

In a graph or chart, the x-axis, which typically represents the independent variable or the base for measurement comparisons.