1Business taxes increase. What is the impact on aggregate expenditures and incom
ID: 1160316 • Letter: 1
Question
1Business taxes increase. What is the impact on aggregate expenditures and income?
Both increase.
Both decrease.
Aggregate expenditure increases and income decreases.
Aggregate expenditure decreases and income increases.
2Assume that the U.S. dollar depreciates against the Japanese yen. What is the impact on aggregate expenditures and income?
Both increase.
Both decrease.
Aggregate expenditure increases and income decreases.
Aggregate expenditure decreases and income increases.
3Personal income taxes are reduced as part of an expansionary fiscal policy. What is the impact on aggregate expenditures and income?
Both increase.
Both decrease.
Aggregate expenditure increases and income decreases.
Aggregate expenditure decreases and income increases.
4Stock market wealth decreases. What is the impact on aggregate expenditures and income?
Both increase.
Both decrease.
Aggregate expenditure increases and income decreases.
Aggregate expenditure decreases and income increases.
Both increase.
Both decrease.
Aggregate expenditure increases and income decreases.
Aggregate expenditure decreases and income increases.
Explanation / Answer
1) Solution: Both decreases
Explanation: When business taxes increase it reduces the income thus aggregate expenditures falls too
2) Solution: Both increases
Explanation: When dollar depreciates people income and expenditure both will increase
3) Solution: Both increases
Explanation: When personal tax will reduce people will have more in hand for expensiture thus both aggregate expenditures and income increases
4) Solution: Both decreases
Explanation: Stock market wealth affects household behavior, especially consumption thus a fall in Stock market wealth will affect the consumption and thus reducing aggregate expenditures and income
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