In the short run, how will an increase in aggregate demand most likely affect th
ID: 1211400 • Letter: I
Question
In the short run, how will an increase in aggregate demand most likely affect the overall price level and real GDP?
D. decrease; increase
The following actions by the Federal Reserve Bank would have similar effects on the size of the US Money Supply - an increase in the reserve ratio and selling government securities
True
False
A. increase; decrease B. decrease; decrease C. increase; increaseD. decrease; increase
The following actions by the Federal Reserve Bank would have similar effects on the size of the US Money Supply - an increase in the reserve ratio and selling government securities
True
False
Which of the following best explains why a $7 billion tax cut can lead to a $21 billion increase in consumer spending in the short run? A. Tax cuts reduce interest rates; which stimulates consumer spending and borrowing. B. Tax cuts increase disposable income, and couple with the multiplier can lead to additional consumer spending C. Tax cuts increase government transfer payments; which leas to higher national income and additional consumer spending. D. Tax cuts reduce government spending; which encourages consumer spending.Explanation / Answer
Answer 1: C increase,increase
as with increase in AD D>S leading to more prices ,thus more real production
Answer 2: True
increase in reserve ratio will lead to decrease in money supply and selling of government securities will also lead to same.
Answer 3:B Tax cuts increases disposable income and cuple with the multiplier can lead to additional consumer spending.