When Taxes Decrease, Consumption Increases

question 23

Multiple Choice

When taxes decrease, consumption increases. How is this situation represented in the aggregate demand and aggregate supply model?

• A) by a movement to the right along a given aggregate-demand curve
• B) by shifting aggregate demand to the right
• C) by shifting aggregate supply to the right
• D) by a movement to the left along a given aggregate-demand curve

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Definitions:

Approximately Normal

Describes data that roughly follows a normal distribution, though it may not perfectly fit the normal curve.

Z Test Statistic

A type of statistical test where the test statistic follows a normal distribution under the null hypothesis.

Population Proportion

The fraction or percentage of a population that possesses a particular attribute or characteristic.

Sampling Distribution

The framework of distributed probabilities for an established statistic, gathered from random sampling.