According to Keynesian analysis, if government expenditures and taxes are increased by the same amount, which of the following will occur?
A) Aggregate supply will decrease
B) Aggregate supply will increase
C) Aggregate demand will be unaffected
D) Aggregate demand will decrease
E) Aggregate demand will increase
Answer: E) Aggregate demand will increase
You might also like to view...
Which of the following changes would probably not lead to an increase in aggregate expenditure?
a. an increase in aggregate wage income b. an increased mood of optimism about the nation's economic prospects c. an increase in the value of corporate stocks d. a decrease in the income tax rate e. an increase in the interest rate
Suppose a bank has $5,000,000 in deposits, a required reserve ratio of 20 percent, and total reserves of $1,000,000. Then the bank has excess reserves of
A. $1,000,000. B. $0. C. $2,000,000. D. $500,000.
Riva crafts and sells hard cider as a part-time job. She can bottle and sell four cases in a week. She is considering hiring her friend Atul to help her. Together, Riva and Atul can bottle and sell seven cases per week. What is Atul's marginal product?
a. 2 cases b. 3 cases c. 5 cases d. 7 cases
The country of Mu has continuous strong economic growth and a persistently steady price level. This situation is most likely the result of aggregate demand growing ... aggregate supply
What will be an ideal response?