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While Targeting the Deficit, Which of the Following Is Likely

Question 134

Multiple Choice

While targeting the deficit, which of the following is likely to occur after a negative aggregate demand shock?


A) AD↓ ⇒ Y↓ ⇒ T↓ ⇒ deficit↑ ⇒ G↓ ⇒ AD↓ ⇒ Y↓
B) AD↓ ⇒ Y↓ ⇒ T↓ ⇒ deficit↑ ⇒ G↑ ⇒ AD↑ ⇒ Y↑
C) AD↓ ⇒ Y↓ ⇒ T↓ ⇒ deficit↑ ⇒ G↓ ⇒ AD↑ ⇒ Y↑
D) AD↓ ⇒ Y↓ ⇒ T↑ ⇒ deficit↑ ⇒ G↑ ⇒ AD↓ ⇒ Y↓

Correct Answer:

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