Which of the following government actions would lead to an increase in aggregate demand?
(1) Increasing taxation and keeping government expenditure the same
(2) Decreasing taxation and increasing government expenditure
(3) Decreasing money supply
(4) Decreasing interest rates
A. 1 only
B. 1 and 3
C. 2 and 4 only
D. 2, 3 and 4
Governments have a number of economic targets as part of their fiscal policy.
Which of the following government actions relate predominantly to fiscal policy?
1 Decreasing interest rates in order to stimulate consumer spending
2 Reducing taxation while maintaining public spending
3 Using official foreign currency reserves to buy the domestic currency
4 Borrowing money from the capital markets and spending it on public works
A. 1 only
B. 1 and 3
C. 2 and 4 only
D. 2, 3 and 4