Question

If consumer confidence decreases then aggregate demand will

Answer 1

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.

Disposable Income Consumer Spending
$12,000