Question : Decrease in _________, will reduce the aggregate demand in the economy.
Option 1: Taxation
Option 2: Government spending
Option 3: Both A and B
Option 4: Neither A nor B
Answer (1)
26th Jan, 2024
Correct Answer:
Government spending
Solution :
Decrease in government spending will reduce the aggregate demand in the economy. Households needs to pay for those services which was earlier paid by the government.
Hence, Option B is correct.
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