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In an aggregate demand-aggregate supply diagram what will equal decreases in government spending and taxes do?
Wiki User
∙ 11y ago
No effect. Spending will decrease Aggregate Demand, lower taxes will raise Aggregate Demand
Wiki User
∙ 11y ago
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What will happen if the government decreases spending and everything else remains constant?
If the government decreases spending and everything else remains constant, there will be a decrease in aggregate demand, leading to a slowdown of economic growth or even leading to a contraction of the economy.
A decrease in government spending will cause a?
decrease in aggregate demand
What are the factors that would affect the aggregate demand?
Consumption, investment, government spending, net exports, and aggregate expenditures.
An increase in government spending on health care is likely to shift the?
Aggregate demand curve to the right. Stay Golden
What is the smallest component of aggregate spending in US?
consumer spending
What will happen if the government decreases spending and everything else remains constant?
If the government decreases spending and everything else remains constant, there will be a decrease in aggregate demand, leading to a slowdown of economic growth or even leading to a contraction of the economy.
A decrease in government spending will cause a?
decrease in aggregate demand
What are the factors that would affect the aggregate demand?
Consumption, investment, government spending, net exports, and aggregate expenditures.
How does large Government spending help the economy?
Government spending increases aggregate demand by giving money to individuals and business to hopefully spend.
What is most likely to occur after the government increases taxes?
It reduces the money available for private sector spending.
An increase in government spending on health care is likely to shift the?
Aggregate demand curve to the right. Stay Golden
What is the smallest component of aggregate spending in US?
consumer spending
Which of these statements is fundamental part of keynesian economics?
The government can use deficit spending to increase aggregate demand and pull the economy out of recession.
What statements is a fundamental part of Keynesian economics?
The government can use deficit spending to increase aggregate demand and pull the economy out of recession.
What is the smallest component of aggregate spending?
Net exports.
Can anyone helps to explain the links between changes in the nations money supply the interest rate investment spending aggregate demand and real GDP and the price level?
An increase in the nation's money supply lowers interest rates, thus decreases the cost of doing business. With a higher return on investment, investment spending increases and so too does aggregate supply. As aggregate supply increases, aggregate demand increases and so prices go up. Thus real GDP and APL increase.
Shift in the aggregate demand curve?
Remember that aggregate demand is composed of consumer spending, investment spending, government spending, and net export spending. Many things affect consumer spending. The main things are consumer wealth, consumer expectations, household indebtedness, and taxes. The wealthier the consumers, the more they will spend. The higher the consumer's expectations are, the more they will spend. The lower the consumer's indebtedness, the more they will spend. The lower their taxes are, the more they will spend. If consumer spending increases, the aggregate demand curve will shift to the right. As for investment spendings: interest rates and expected returns affect this variable. As interest rates decrease, there will be more investments made. The higher a business's expected return is, the more they will invest. If more investments are being made, the aggregate demand curve will shift to the right. Change in government spending is pretty self explanatory. The more government decides to spend, the more aggregate demand will increase and therefore, shift to the right. For net expert spendings, a rising national income would mean more US exports. Moreover, a depreciation of the dollar causes more US exports. The more net exports there are, the more aggregate demand will increase and therefore, shift to the right.
