Question 1) How does the real wealth effect explain the slope of the aggregate demand curve?

A negatively sloped curve; a decrease in the price level increases real wealth or real balances

A positively sloped curve, depicting a positive relationship between price and quantity demanded

A negatively sloped curve; with an increase in real wealth, the nominal value of the money decreases

A positively sloped curve; since the real value of the money is fixed, but the nominal value depends on the price

A negatively sloped curve; when the prices decrease, it decreases the money available in consumers' hands

Question 2)

How can an expansionary fiscal policy be useful in an economy?

Decreasing money supply can help relieve inflationary pressures in the economy.

Increasing tax rates can help relieve inflationary pressures in the economy.

Decreasing tax rates can help relieve inflationary pressures in the economy.

Increasing government expenditures can help relieve recessionary pressures in the economy.

Increasing money supply can help relieve recessionary pressures in the economy.

Question 3)

A progressive tax system is a type of a(n) ________ because it helps increase ________ and maintain aggregate demand during times of economic recession.

discretionary policy; disposable income

automatic stabilizer; tax revenue

automatic stabilizer; disposable income

discretionary policy; transfer payments

monetary policy; money supply

Question 4)

If the government of a country decides to ________ spending on infrastructure development and increase ________, then it is trying to implement a contractionary fiscal policy.

decrease; education funding

increase; transfer payments

decrease; taxation

increase; public savings

increase; aggregate supply

Question 5)

Assume that the marginal propensity to consume is 0.6. What is the significance of an increase in expenditure on the equilibrium real GDP?

A $1 increase in expenditure will increase the equilibrium real GDP by $2.50.

A $1 increase in expenditure will decrease the equilibrium real GDP by $2.50.

A $1 increase in expenditure will increase the equilibrium real GDP by $1.50. A $1 increase in expenditure will decrease the equilibrium real GDP by $1.50.

Being a function of autonomous components of government expenditure; there are no changes in the equilibrium real GDP.

Thank you! Please explain the answers to me.