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What effects would each of the following have on AD and why ?

What effects would each of the following have on AD and why? You may use diagrams to aid your explanation.


a. A widespread fear by consumers of an impending economic depression

b. A new national tax on producers based on the value added between input costs and revenue received

c. A reduction in the real interest rate at each price level

d. A major increase in spending for health care by the Federal government

e. The general expectation of rapid inflation in the near future

Top Answer

a) When there is an anticipation of an economic recession, the consumer spending will reduce as the consumers will have to... View the full answer

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