Author Question: The intersection of aggregate demand and long-run aggregate supply identify the price level at which ... (Read 104 times)

michelleunicorn · **on:** Jun 30, 2018

The intersection of aggregate demand and long-run aggregate supply identify the price level at which total planned

A) government spending equals total planned tax revenues.
B) real expenditures equal actual nominal GDP.
C) real expenditures equal total planned production.
D) export spending equals total planned import spending.

Question 2

Which of the following best explains why the federal tax rebates in 2008 and 2009 had almost no effects on aggregate demand?

A) According to Ricardian equivalence theorem, those tax rebates did not affect aggregate demand because they were accompanied by more government spending.
B) According to the permanent income hypothesis, those one-time tax rebates did not affect consumption because taxpayers did not believe the rebates would occur.
C) According to Ricardian equivalence theorem, those tax rebates did not affect aggregate demand because there were no direct expenditure offsets.
D) According to the permanent income hypothesis, those one-time tax rebates did not affect consumption because they did not change taxpayers' permanent income.