Which of the Following Would Cause Aggregate Demand to Decrease

question 19

Multiple Choice

Which of the following would cause aggregate demand to decrease?

• A)The government increases taxes on both business and personal income.
• B)There is a reduction in the nation's labour supply.
• C)The Bank of Canada increases the amount of money in circulation.
• D)Businesses and households believe that the economy is headed for good times,so they begin to feel increased security about their jobs.

Understand the relationship between supply, demand, and price changes.

Identify the impact of external factors such as natural disasters and seasonal changes on market equilibrium.

Differentiate between shifts in demand and supply versus movements along the demand and supply curves.

Analyze the effects of complementary and substitute goods on market dynamics.

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Definitions:

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, used as a measure in calculating labor costs and efficiency.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to allocate manufacturing overhead costs to products based on a selected activity base.

Manufacturing Overhead

All manufacturing costs that are not directly tied to the production of goods, such as rent, utilities, and salaries of maintenance personnel.

Total Manufacturing Cost

The aggregate of all costs directly attributable to the production of goods, including material, labor, and overhead costs.