Which of the Following Government Policies Would Increase Aggregate Demand

question 14

Multiple Choice

Which of the following government policies would increase aggregate demand?

• A)a deficit in the government budget
• B)a stimulation of investment through an increase in taxes
• C)a stimulation of consumption through an increase in taxes
• D)a surplus in the government budget
• E)a decrease in government spending

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Definitions:

Output

The amount of something produced by a person, machine, or industry.

Total Cost

The aggregate of fixed and variable costs of production for a given level of output, encompassing all expenses needed to produce goods or services.

Produce

To create or manufacture goods and services for consumption using labor, materials, and machinery.

Diminishing Returns

Diminishing returns, a concept in economics, occurs when adding an additional factor of production results in a lower increment of output, assuming other factors are constant.