Question

An increase in consumer expenditures during the holiday season, a decrease in purchases of U.S. goods by foreigners, a tax increase, and a decline in new home starts are examples of: Group of answer choices a monetary policy. an aggregate supply shock. an aggregate demand shock. expectations. Ricardian equivalence.

Answer 1

Answer:

Option C (an aggregate demand shock) is the right solution.

Explanation:

• Examples of such an overall demand shock are the same as the aforementioned, i.e. a rise throughout customer sales over the holiday season, a reduction in overseas imports of U.S. goods, a consumption tax, as well as a drop in new housing starts when they trigger a change in the AD curve.  
• A transition exists in aggregate demand at that same specified price level.  

And therefore option C seems to be the right alternative,