Aggregate Demand and GDP

What is one possible justification for a downward sloping aggregate demand curve?

• Increase in government spending

• Decrease in interest rates

• Tax cut for consumers

• Increase in net exports

Which component of GDP would be affected if there was a tax increase without a corresponding increase in government spending?

• Consumption

• Investment

• Government spending

• Net exports

What might cause an increase in investment?

• Tax cut for consumers

• Decrease in interest rates

• Increase in government spending

• Increase in net exports

If government spending goes up, what happens to the aggregate demand curve?

• Shifts to the right

• Shifts to the left

• Remains unchanged

• Cannot be determined

What would cause an increase in net exports?

• Tax cut for consumers

• Decrease in interest rates

• Increase in government spending

• Increase in demand for foreign goods

If there is a tax cut for consumers, what happens to aggregate demand?

• Shifts to the right

• Shifts to the left

• Remains unchanged

• Cannot be determined

What is the formula for calculating GDP?

• Consumption + Investment + Government spending + Net exports

• Consumption - Investment - Government spending - Net exports

• Consumption * Investment * Government spending * Net exports

• Consumption / Investment / Government spending / Net exports

If people in our country start buying more foreign goods, what happens to aggregate demand?

• Shifts to the right

• Shifts to the left

• Remains unchanged

• Cannot be determined

What would cause a decrease in aggregate demand?

• Tax cut for consumers

• Decrease in interest rates

• Decrease in government spending

• Increase in net exports

If interest rates go down, what happens to investment?

• Increases

• Decreases

• Remains unchanged

• Cannot be determined