Question : Statement 1: An increase in exports will lead to a shift in aggregate demand.
Statement 2: An increase in consumer confidence will lead to a shift in aggregate supply.
Which statement is correct?
Option 1: Only Statement 1
Option 2: Only Statement 2
Option 3: Both Statement 1 and Statement 2
Option 4: Neither Statement 1 nor Statement 2
Correct Answer: Only Statement 1
Solution : The correct answer is (A) Only Statement 1
Statement 1 is correct. Exports are a component of aggregate demand, and an increase in exports represents an increase in demand for a country's goods and services from abroad. This leads to an expansion of aggregate demand and can have positive effects on economic growth.
Statement 2 is incorrect. Consumer confidence primarily influences consumer spending, which is a component of aggregate demand. It does not directly impact aggregate supply, which is determined by factors such as technology, resources, and production capacity.
Therefore, the correct answer is A) Only Statement 1.
Question : Statement 1: An increase in government spending will lead to a shift in aggregate demand.
Statement 2: An increase in wages will lead to a shift in aggregate supply.
Statement 2: An increase in taxes will lead to a shift in aggregate supply.
Question : Statement 1: An increase in imports will lead to a shift in aggregate demand.
Statement 2: An increase in production costs will lead to a shift in aggregate supply.
Question : Statement 1: An increase in government spending will lead to a rightward shift in the aggregate demand curve.
Statement 2: An increase in aggregate supply will lead to a decrease in the price level.
Question : Statement 1: A decrease in government regulations will lead to a rightward shift in the aggregate supply curve.
Statement 2: An increase in consumer savings will lead to a leftward shift in the aggregate demand curve.
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