In an Aggregate Expenditures Diagram Equal Increases in Government Spending

question 205

Multiple Choice

In an aggregate expenditures diagram equal increases in government spending and in lump-sum taxes will:

• A)shift the aggregate expenditures line downward.
• B)shift the aggregate expenditures line upward.
• C)not affect the aggregate expenditures line.
• D)reduce the equilibrium GDP.

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Definitions:

Retail Price

The price at which a product is sold to the public, usually after including costs of production, distribution, and a markup for profit.

Ensure Freshness

Measures or practices used to maintain the quality and safety of perishable products.

Refrigerator

An electrical appliance used for keeping food and drinks cold, playing a crucial role in modern food preservation and safety.

Double Marginalization

A situation in a supply chain where both the manufacturer and retailer mark up prices above their marginal costs, leading to inefficiencies.