Refer to the diagram, in which Q f is the full-employment output. If aggregate demand curve AD 2 describes the current situation, appropriate fiscal policy would be to:
A. do nothing since the economy appears to be achieving full-employment real output.
B. increase taxes and reduce government spending to shift the aggregate demand curve
rightward from AD 2 to AD 3 .
C. increase taxes on businesses to shift the aggregate supply curve rightward to reduce the
price level.
D. reduce taxes and increase government spending to shift the aggregate demand curve from
AD 2 to AD 1
A. do nothing since the economy appears to be achieving full-employment real output.
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The economy pictured in the figure below has a(n) ________ gap with a short-run equilibrium combination of inflation and output indicated by point ________. 
A. recessionary; B B. recessionary; C C. recessionary; A D. expansionary; A
Smaller companies typically do not trade on the
A) New York Stock Exchange. B) American Stock Exchange. C) Nasdaq. D) OTC Market.
The fact that travel on buses fell as incomes increased in many cities suggests that
a. bus travel is a normal good b. the law of demand does not apply to bus travel c. bus travel is an inferior good d. there are no good substitute goods for bus travel
Keynesians, monetarists, and classical economists all agree that the transactions demand for money is money being used as a
a. measure of value b. store of value c. standard of deferred payments d. medium of exchange e. medium of barter