When taxes increase, consumption
a. decreases as shown by a movement to the left along a given aggregate-demand curve.
b. decreases as shown by a shift of the aggregate demand curve to the left.
c. increases as shown by a movement to the right along a given aggregate-demand curve.
d. increases as shown by a shift of the aggregate demand curve to the right.
Answer: b. decreases as shown by a shift of the aggregate demand curve to the left.
You might also like to view...
If the Fed decides to buy T-bills, it increases the demand for T-bills. How will this affect the price of T-bills and the interest rate?
A. T-bill prices fall and interest rates fall. B. T-bill prices rise and interest rates rise. C. T-bill prices rise and interest rates fall. D. T-bill prices fall and interest rates rise.
For most goods and services, income elasticity of demand tends to be smaller in the short run than in the long run. However, a recent study shows that the demand for a durable good such as automobiles tends to be more income-elastic in the short run than in the long run. Explain why.
What will be an ideal response?
A rise in net exports shifts the aggregate
A. demand curve inward. B. demand curve outward. C. supply curve outward. D. supply curve inward.
What's the firm's contribution margin?
a. $1800 b. $800 c. $1000 d. $300