Econ Unit 5 Review

Aggregate demand refers to:

• the total demand for all goods and services in an economy

• the demand for goods that are inelastic

• the demand for goods but not services

• the demand for goods during a recession

A(n) ______ in consumer spending would lead to a decrease in aggregate demand.

• increase

• decrease

An increase in tax rates would lead to a(n) ______ in aggregate demand.

• increase

• decrease

A decrease in CPI would lead to a(n) ______ in aggregate demand.

• increase

• decrease

Fiscal policy is primarily done by:

• the President and Congress

• the Fed

If inflation was rising, which of the following fiscal policy measures would the government likely take?

• decrease tax rates

• increase government spending

• increase tax rates

• increase interest rates

If GDP was falling and unemployment was up which of the following fiscal policy measures would the government likely take?

• increase tax rates

• decrease government spending

• increase the money supply

• increase government spending

Keynesian theory advocates for:

• government intervention before economic problems grow worse

• allowing the economy to self correct

Taxes automatically ______ during times of expansion and economic growth.

• increase

• decrease

Which type of tax charges the same dollar amount to all income earners? This leads to lower earners paying at a higher tax rate.

• proportional tax

• regressive tax

• progressive tax