Choose which one of the following descriptions matches the possible scenario shown by the shift fromAD to AD₁ in Figure 3.Aggregatedemand45°Figure 3: The aggregate demand modela. Rise in tax rate and rise in government spending.b. Rise in tax rate and fall in government spending.c. Fall in tax rate and fall in government spending.d. Fall in tax rate and rise in government spending.AD₁ADOIncome/Output

The issue depicted in the graph is an outward shift in the aggregate demand (AD) curve from AD0 to…

Rise in tax rate and rise in government spending. b. Rise in tax rate and fall in government spending. Fall in tax rate and fall in government spending. d. Fall in tax rate and rise in government spending.

Rise in tax rate and rise in government spending. b. Rise in tax rate and fall in government spending. Fall in tax rate and fall in government spending. d. Fall in tax rate and rise in government spending.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

ChapterD: The Expenditure-output Model

Section: Chapter Questions

Problem 24CTQ: Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on...

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Question

Choose which one of the following descriptions matches the possible scenario shown by the shift from
AD to AD₁ in Figure 3.
Aggregate
demand
45°
Figure 3: The aggregate demand model
a. Rise in tax rate and rise in government spending.
b. Rise in tax rate and fall in government spending.
c. Fall in tax rate and fall in government spending.
d. Fall in tax rate and rise in government spending.
AD₁
ADO
Income/Output

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