If some non-price level determinant causes total spending to increase, then the effect on aggregate demand will be a:
a. movement upward along the curve.
b. movement downward along the curve.
c. shift to the left.
d. shift to the right.
Question 2
Suppose an economy operates at a real GDP level of 855, where saving = 400; investment = 95; government spending = 365; taxes = 130; imports = 210; exports = 170 . Which of the following statements is true in the light of the given information?
a. Aggregate expenditures will fall, because total injections exceed total leakages by 110.
b. Real GDP will increase, because total injections are less than 855.
c. The economy will be in equilibrium, because leakages equal injections.
d. Real GDP will fall, because total leakages exceed total injections by 110.
e. Inventories will rise, because planned saving exceeds planned investment.
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