Which government fiscal policy is a positive demand shock?

Name: Which government fiscal policy is a positive demand shock?
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Question

Quizplus · Accepted Answer

A positive demand shock refers to an event that increases aggregate demand. Increasing taxes (A) and decreasing transfer payments (B) would likely decrease disposable income, reducing consumption and thus aggregate demand. Decreasing government spending (C) directly reduces aggregate demand. Therefore, none of the options listed would be considered a positive demand shock.

Which Government Fiscal Policy Is a Positive Demand Shock