Suppose fiscal authorities raise state income tax rates. As a result, disposable income falls, thereby
A) decreasing consumption spending, and causing the aggregate demand curve to shift to the left.
B) decreasing consumption spending, and causing a movement along a given aggregate demand
curve.
C) increasing saving, and causing the aggregate demand curve to shift to the left.
D) increasing saving, and causing a movement along a given aggregate demand curve.
Ans: A) decreasing consumption spending, and causing the aggregate demand curve to shift to the left.
You might also like to view...
The time consistency problem implies that
A) the central bank should not commit. B) central bank commitment is useful. C) discretion is better than tying your hands. D) there are problems we cannot solve.
Consumers and firms are known as price takers only if
A) no market exists to determine the equilibrium price. B) they can set the market price. C) they cannot unilaterally affect the market price. D) excess demand exists.