Which of these could cause excess demand?

A rise in the CRR when prices are already risingCorrect answerYour answerA rise in income tax rates for every slabCorrect answerYour answerA fall in exports to the rest of the worldCorrect answerYour answerA big rise in government spending at full employmentCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

Extra spending at full employment pushes AD above full-employment output.
The other three lower AD.

Concept: Causes of excess demand
Typical timeTypical: 70 s
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The rule this testsExcess demand and the inflationary gap

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Which of these could cause excess demand?

Explanation