A positive demand shock increases consumer and investment spending and tends to decrease the budget deficit.

Question

Quizplus · Accepted Answer

A positive demand shock leads to higher consumer and investment spending, which typically results in increased economic growth and higher tax revenues for the government. This can help decrease the budget deficit by increasing revenue and decreasing the need for government spending on social welfare programs due to lower unemployment.

A Positive Demand Shock Increases Consumer and Investment Spending and Tends