A shift of the AD-curve to the right could be caused by
A. a decrease in taxes
B. a decrease in government transfer payments
C. an increase in money demand
D. a decrease in defense spending
E. both A) and C)
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An increase in aggregate demand can be caused by
A. an increase in government expenditures
B. an increase in nominal money supply
C. a decrease in taxes
D. an increase in business and consumer confidence
E. all of the above
To maintain a fixed level of aggregate demand, a central bank would have to respond to a tax increase by
A. increasing reserve requirements for banks
B. restricting money supply
C. buying bonds in the open market
D. selling bonds in the open market
E. both A) and B)
In a normal AD-AS diagram with an upward-sloping AS-curve, if the government wanted to maintain a fixed level of output, it would need to respond to a decrease in money supply by
A. decreasing government expenditures
B. increasing government spending
C. urging the Fed to sell bonds in the open market
D. increasing income taxes
E. decreasing taxes and government spending by the same amount
In an AD-AS diagram with an upward-sloping AS-curve, if a tax decrease is combined with money expansion,
A. output will remain relatively unaffected but interest rates will decrease
B. output will remain relatively unaffected but interest rates will definitely increase
C. aggregate demand, the price level, and output will all decrease
D. aggregate demand, the price level, and output will all increase
E. the price level will increase but we can't say what will happen to output or interest rates
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