Using the AD-AS model, if consumers and business become more optimistic about the future direction of the economy and increase spending, then:
A. aggregate demand will decrease.
B. aggregate demand will increase.
C. long-run aggregate supply will increase.
D. long-run aggregate supply will decrease.
Answer: B
You might also like to view...
The government can meet its interest bill without having to levy taxes if it issues more bonds and if the
A) economy's real growth rate of output is greater than the real interest rate. B) economy's real growth rate of output is equal to the nominal interest rate. C) economy's real growth rate of output equals or exceeds its real interest rate. D) economy's nominal growth rate of output equals or exceeds its real interest rate.
Other things being equal, what is the effect of deficit spending on interest rates?
A) Interest rates decline. B) Interest rates rise. C) Interest rates hold constant because the demand for credit decreases. D) There is no impact unless the Federal Reserve decides to alter the money supply.