Which of the Following Will NOT Cause Aggregate Private Spending

question 25

Multiple Choice

Which of the following will NOT cause aggregate private spending to decrease?

• A)a reduction in expected future real interest rates
• B)a reduction in government spending
• C)an increase in future taxes
• D)all of the above
• E)none of the above

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Definitions:

Production Possibilities

The various combinations of goods and services that an economy can produce, given its technological capabilities and available resources.

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors, leading to specialized production and trade benefits.

Specialization

The process in which individuals, firms, or countries focus on producing a narrow range of goods or services to gain greater efficiencies and increase productivity.

Production Possibilities Curves

A graph that depicts the maximum potential output of one good for a given amount of output for another, assuming full efficiency and fixed resources.