Identify factors that would cause consumption spending to increase. What effect would that have on aggregate demand?
The factors that cause consumption to increase include lower income taxes, a rise in consumer confidence, and a greater stock market wealth. These would have the effect of shifting the aggregate demand curve to the right (an increase.)
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As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences
A) structural unemployment. B) frictional unemployment. C) cyclical unemployment. D) changes in the business cycle. E) avoidable unemployment.
Additions to inventory are
A) not counted as an expenditure in GDP accounting. B) counted as an intermediate input. C) counted as a component of investment spending. D) subtracted from sales revenue in calculating profit income.
Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicycles is:
A. inelastic, and total revenue will increase. B. elastic, and total revenue will increase. C. inelastic, and total revenue will decrease. D. elastic, and total revenue will decrease.
Infrastructure is best illustrated by:
A. farm equipment. B. school buildings and highways. C. machinery and equipment for the production of consumer goods. D. government tax revenues.