If consumer confidence decreases then aggregate demand will
decrease and output will decrease but price level will increase.
If Congress passes a plan to cut the national debt in half by increasing personal income taxes, then AD shifts left and price level would decrease
Question 5(Multiple Choice Worth 3 points) Assume Angela’s disposable income is $800 and her boss gives her a $100 raise. Her consumption increased from $600 to $650. Which of the following is true? MPC = .75
The value of the expenditure multiplier increases when tax rates increase. the marginal propensity to consume increases.
