For each of the following scenarios, please decide whether there will be an increase, decrease, or no change in aggregate demand.
(Hint: 2 are increases, 2 are decreases)
1. The United States government decides to increase the federal tax rate by 4% for all earners.
2. The Federal Reserve, the agency charged with regulating banking and monetary policy in the United States, decides to increase the amount of money available in the economy.
3. The newest release of the Consumer Confidence Index shows a steady increase in consumer confidence about the economy.
4. A manufacturing boom during the late 1990s has created an oversupply of tractors, a necessary implement in agricultural production.