What Would Happen to Aggregate Demand If the Federal Government

question 202

Multiple Choice

What would happen to aggregate demand if the federal government increased military purchases and state and local governments decreased their road building budgets at the same time?

• A)​AD would increase, because only federal government purchases affect AD.
• B)​AD would decrease, because only state and local government purchases affect AD.
• C)​AD would increase if the change in federal purchases were smaller than the change in state and local purchases.
• D)​AD would decrease if the change in federal purchases was smaller than the change in state and local purchases.

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Definitions:

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A market condition where the quantity demanded of a product exceeds the quantity supplied at a given price, leading to upward pressure on prices.

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A U.S.-based organization that advocates for gun rights, promotes firearm competency, and provides firearm training.

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A local government election in Nashville to choose the city's mayor.