In Addition to Government Purchases or Changes in Taxes, Demand

question 55

Multiple Choice

In addition to government purchases or changes in taxes, demand shocks in the economy can increase or decrease GDP, leading to a fall or rise in the trade balance. Which of the following would NOT represent a demand shock?

• A) a change in household wealth leading to a rise in consumption expenditures
• B) a rise in inflation
• C) a change in the marginal propensity to import, causing imports to rise
• D) an increase in technology, causing investment spending to rise

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Definitions:

Feel

Pertains to the experience of emotions or sensations.

Cultures

The social behavior, norms, knowledge, and characteristics that define a particular society or community.

Emotions

Complex psychological states involving physiological arousal, expressive behaviors, and conscious experience, typically triggered by a specific event or thought.

Pursuit of Happiness

The continual effort to achieve personal well-being and satisfaction, often considered a fundamental human goal.