State and Local Governments During Recessions. During recessions, state governments often will have to raise taxes and cut spending in order to keep their own budgets balanced. If a large number of states do this, at the national level, the aggregate demand curve will

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Business

Jaylen Reeves

22 June, 04:40

State and Local Governments During Recessions. During recessions, state governments often will have to raise taxes and cut spending in order to keep their own budgets balanced. If a large number of states do this, at the national level, the aggregate demand curve will

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Answers (1)

Know the Answer?

Leslie Hatfield · Answer 1

The correct answer is Shift to the left since both of these actions are contractionary.

Explanation:

The aggregate demand is the total goods and services demanded by a country, at a certain price level, in a certain period of time.

The aggregate demand that can be accounted for measures exactly the same as GDP. So many times they are used as synonyms.

The aggregate demand curve graphically represents all the combinations between the price level and the national production with the money market and the goods market. The higher the prices, the lower the aggregate demand. The IS-LM model represents the aggregate demand curve.