Refer to the diagram, in which Q f is the full-employment output. If aggregate demand curve AD 1 describes the current situation, appropriate fiscal policy would be to:
A. increase taxes and reduce government spending to shift the aggregate demand curve
rightward to AD 2 .
B. reduce taxes on businesses to shift the aggregate supply curve leftward.
C. reduce taxes and increase government spending to shift the aggregate demand curve from AD 1 to AD 2 .
D. do nothing since the economy appears to be achieving full-employment real GDP.
C. reduce taxes and increase government spending to shift the aggregate demand curve from AD 1 to AD 2 .
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One year before maturity the price of a bond with a principal amount of $1,000 and a coupon rate of 5% paid annually fell to $981. The one year interest rate must be
A. 8.5%. B. 7.0%. C. 5.0%. D. 1.9%.
An inframarginal positive externality _____
a. requires subsidization to reach an optimal level of output b. requires regulation to reach an optimal level of output c. requires corrective taxation to reach an optimal level of output d. requires no action because the optimal level of output has been reached
As farm productivity increases faster than demand:
a. fewer farmers are required to meet demand b. the number of farmers decreases over time c. the decreasing number of farmers is good news for society because the basic economic problem is scarcity d. all of the above
Which of the following professionals is most likely to generate the income of a superstar?
a. the best teacher b. the best dentist c. the best guitar player d. the best airplane pilot