A $1 increase in government purchases will likely have a greater impact on real GDP than a $1 decrease in taxes because:

a portion of a tax cut will be saved.

government spending increases disposable income, tax cuts do not

taxes vary directly with income.

government spending increases the money supply, tax cuts do not

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The effect of built-in stabilizers (non-discretionary fiscal policies) on the business cycle is to:

make the upswings larger and the downswings smaller.

only help the economy when it is in a downswing (recessionary).

make both upswings and downswings smaller.

make rich people richer and poor people poorer.

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A leftward shift of the AS curve is often associated with:

the stock market crash of 1987.

the stagflation of the 1970's.

demand-pull inflation of the "Vietnam era" of the 1960's.

the Great Depression.

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The Keynes-Interest Rate effect suggests that

the above scenario- lower prices, lower interest rates- would result in a movement up the AD curve.

a lower price level might lead to a reduction in the demand for money resulting in a fall in the rate of interest, the result will be a movement down the AD curve.

lower prices and, therefore lower interest rates would cause the AD curve to shift left.

higher prices and, therefore higher interest rates would cause the AD curve to shift.

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The aggregate demand curve (AD) is:

downsloping because production costs decrease as real output increase

downsloping due to the Pigou-Wealth effect, Keynes-Interest Rate effect, and the Foreign Purchases effect.

horizontal when there is a high level of unemployment in the economy

vertical if full employment exists

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