question archive 1) During recessions which type of spending falls? a
1) During recessions which type of spending falls? a
Subject:EconomicsPrice:3.87 Bought7
1) During recessions which type of spending falls?
| a. |
consumption and investment |
|
| b. |
investment but not consumption |
|
| c. |
consumption but not investment |
|
| d. |
neither consumption nor investment |
2) Which of the following shifts aggregate demand to the right?
| a. |
Congress reduces purchases of new weapons systems. |
|
| b. |
The Fed buys bonds in the open market. |
|
| c. |
The price level falls. |
|
| d. |
Net exports fall. |
3) Aggregate demand shifts right when the government
| a. |
raises personal income taxes. |
|
| b. |
increases the money supply. |
|
| c. |
repeals an investment tax credit. |
|
| d. |
All of the above are correct. |
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Answer
1. Option A
During recession consumption and investment spendings are falls.
Because
during recession from will be producing less and therefore will need fewer workers. People tend to save money because there is a fall in confidence.if people expect to be made unemployed then you don't want to spend and borrow saving become more attractive.
2. Option b
The fed buys bonds in the open market.
Because
the aggregate demand curve to the right as the component of aggregate demand that is consumption spending investment spending government spending and spending on exports imports rise.
3. Option B
increase the money supply
aggregate demand shift right when the government increases the money supply
Because
increasing money supply causes reduction in interest rate and further spending and there for an increase in aggregate demand. Increase in the money supply will lead to an increase in consumer spending this increase will shift the aggregate demand curve to the right.
