Author Question: When the price level increases, total planned real expenditures on goods and services falls. All of ... (Read 85 times)

washai · **on:** Jun 30, 2018

When the price level increases, total planned real expenditures on goods and services falls. All of the following are responsible EXCEPT

A) the interest rate effect. B) the real-balance effect.
C) the substitution effect. D) the open economy effect.

Question 2

Suppose the government increases lump-sum taxes. This causes

A) consumption spending to decrease and spending on imports to increase. The effect on aggregate demand depends on whether domestic spending or spending on imports decreased the most.
B) disposable income to decrease, which causes consumption spending to decrease and aggregate demand to decrease.
C) government spending to decrease, which causes aggregate demand to decrease.
D) disposable income to decrease, which causes aggregate supply to decrease.