The Figure Above Shows the Aggregate Demand Curve

question 127

Multiple Choice

The figure above shows the aggregate demand curve.
-The aggregate demand curve in the figure above shifts rightward if

• A)potential GDP increases.
• B)the money wage rate falls.
• C)taxes are raised.
• D)government expenditure increases.
• E)the Federal Reserve raises the interest rate.

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the proportion of any additional dollar of income that must be paid in taxes.

Weighted Average Cost

A calculation that takes into account the varying costs of goods or services by weighting them according to their importance or quantity.

Internal Rate of Return

The discount rate that makes the net present value of all cash flows from a particular project zero.

Interest Rate

Interest: the financial charge applied to the borrower by the lender, calculated as a percentage of the principal for asset usage.