Q4 · Practice questionSimple familiar1 mark
QUESTION 4
Which change directly increases aggregate demand, all else equal?
(A)
An increase in household saving with unchanged income.
(B)
A fall in exports.
(C)
An increase in purchases of imported goods with unchanged total spending.
(D)
An increase in government purchases of locally produced hospital equipment.
WORKED SOLUTION
1 markAnswer D
Answer
D
Working
Government purchases enter AD as G. Increased saving reduces C, lower exports reduce X, and additional imports subtract through M when total spending is unchanged.
Marking criteria
- Select D. [1 mark]
Practice question aligned to the current QCAA syllabus; review the worked solution and marking criteria.
View the QCAA syllabus