Which One of the Following Is TRUE About the Effects

question 269

Multiple Choice

Which one of the following is TRUE about the effects of fiscal policy?

• A) A decrease government spending will increase aggregate supply.
• B) A tax change does not have any direct or indirect effects on aggregate demand.
• C) An increase in government spending will increase aggregate demand.
• D) An increase in government spending will reduce aggregate demand.

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Definitions:

Mood Swings

Rapid and extreme changes in one's emotional state.

Self-Serving Bias

The tendency to attribute positive outcomes to one's own character but attribute negative outcomes to external factors.

Negotiating

The process of discussing and arriving at a mutual agreement between parties with different interests.

Positive Illusions

Optimistically biased beliefs about oneself that are not fully grounded in reality, believed to support psychological well-being.