For each of the following shocks, identify what component(s) of U.S. planned aggregate expenditure are directly affected and in which direction.

a. Income tax rates increase:

Which component of planned aggregate expenditure is affected?

Consumption

Investment

Government spending

Net exports

None of these are affected

What happens to planned aggregate expenditure?

Increases

Decreases

Unaffected

b. China experiences an economic boom:

Which component of planned aggregate expenditure is affected?

Consumption

Investment

Government spending

Net exports

None of these are affected

What happens to planned aggregate expenditure?

Increases

Decreases

Unaffected

c. People become more optimistic regarding their future prospects:

Which component of planned aggregate expenditure is affected?

Consumption

Investment

Government spending

Net exports

None of these are affected

What happens to planned aggregate expenditure?

Increases

Decreases

Unaffected

d. Congress decides to increase funding for education:

Which component of planned aggregate expenditure is affected?

Consumption

Investment

Government spending

Net exports

None of these are affected

What happens to planned aggregate expenditure?

Increases

Decreases

Unaffected

e. German fashion designs become popular among celebrities:

Which component of planned aggregate expenditure is affected?

Consumption

Investment

Government spending

Net exports

None of these are affected

What happens to planned aggregate expenditure?

Decreases

Increases

Unaffected