Assuming government wishes to either increase or decrease the level of aggregate demand, which of the following pairs are not consistent policy measures?

Question

Quizplus · Accepted Answer

A tax increase and an increase in the money supply are not consistent policy measures. Increasing taxes would decrease disposable income and decrease consumption, which would decrease aggregate demand. Conversely, increasing the money supply would increase aggregate demand. Therefore, these measures would work against each other and not lead to the desired outcome of increasing or decreasing aggregate demand.

Assuming Government Wishes to Either Increase or Decrease the Level