Started on Monday, 19 September 2022, 5:04 PM
State Finished
Completed on Monday, 19 September 2022, 7:02 PM
Time taken 1 hour 58 mins
Marks 10.00/16.00
Grade 62.50 out of 100.00
Question 1
Correct
Mark 1.00 out of 1.00
Use the following information to answer the question:
Use the following diagram to answer the question:
Dashboard / Courses / UNISA / 2022 / Semester 2 / ECS1601-22-S2 / Online assessments / Assessment 4
Which event must happen for the aggregate spending curve to swivel upwards as shown in the diagram?
a. An increase in government spending
b. An increase in interest rate
c. A decline in tax rate
d. An increase in investment spending
The introduction of government spending and taxes affects consumer spending, which results in the aggregate spending curve changing.
Government spending causes the aggregate spending curve to shift, while changes in taxes cause the aggregate spending curve to swivel.
Therefore, an upward swivel of the aggregate spending curve is caused by a fall in tax rate. This is because when taxes fall, consumers’
disposable income increases and consumers also increase their spending. An increase in interest rate causes a decrease in investment shown
by a downward shift of the aggregate spending curve and an increase in investment spending and government spending results in an
upward shift of the aggregate spending curve.
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