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While Targeting the Deficit, Which of the Following Is Likely

Question 243

Multiple Choice

While targeting the deficit, which of the following is likely to occur after a positive 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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