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which of the following would cause a decrease in aggregate demand

1. Decrease interest rates

2. Increase interest rates

3. Decrease in Tax rates

4. Central Bank purchasing Government bonds from the open market. 

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Darryn D'Souza
Darryn D'SouzaLv10
31 Oct 2020
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Related questions

If the economy was experiencing an inflation gap, the Fed could

A.sell government securities, thereby reducing bank reserves and lowering interest rates, which would decrease investment expenditures as well as aggregate demand.

B.sell government securities, thereby reducing bank reserves and raising interest rates, which would decrease investment expenditures as well as aggregate demand.

C.sell government securities, thereby reducing bank reserves and raising interest rates, which would decrease investment expenditures as well as aggregate supply.

D.buy government securities, thereby reducing bank reserves and lowering interest rates, which would decrease investment expenditures as well as aggregate demand.

E.buy government securities, thereby reducing bank reserves and raising interest rates, which would decrease investment expenditures as well as aggregate supply.

How do future expectations of an improving economy affect aggregate demand?
 
A) The government will cut regulations to boost aggregate demand.
B) The business sector will expand investments and boost aggregate demand.
C) The central bank will cut interest rates and decrease aggregate demand.
D) The government will increase spending on goods and services and decrease aggregate demand

1. A restrictive monetary policy by the Fed should lead to:

A. A decrease in investment and an increase in aggregate demand.

B. Leave investment unchanged but decrease aggregate demand.

C. An increase in investment and an increase in aggregate demand.

D. A decrease in investment and a decrease in aggregate demand.

2. When the Federal Reserve uses open market operations (OMO) in an expansionary monetary policy:

A. The Fed will purchase stocks from banks, increasing the monetary base.

B. The Fed will buy bonds from banks, increasing bank reserves and increasing the monetary base.

C.The Fed will lower taxes and increase government spending.

D. The Fed will decrease the discount rate, decreasing the monetary base.

3. A primary goal of monetary policy is to:

A. Eliminate trade barriers from other nations.

B. Maintain high interest rates.

C. Reduce the size of the banking sector.

D. Prevent high rates of inflation.

4. The major tools of monetary policy available to the Federal Reserve System involve:

A. Reserve requirements and tax policy.

B. Reserve requirements and open-market operations.

C. The discount rate and exchange rates.

D. Open-market operations and changing government spending,

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