Refer to the above diagram. The economy is at equilibrium at point B. What fiscal policy would increase real GDP?
A. Decrease aggregate demand from AD2 to AD3 by decreasing government spending.
B. Increase aggregate demand from AD2 to AD3 by decreasing taxes.
C. Increase aggregate demand from AD2 to AD1 by decreasing taxes.
D. Decrease aggregate demand from AD2 to AD3 by increasing government spending.
Answer: B
You might also like to view...
Refer to Table 4-4. Suppose that the quantity of labor demanded increases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?
A) W = $8.00; Q = 390,000 B) W = $9.50; Q = 380,000 C) W = $10.00; Q = 390,000 D) W = $8.50; Q = 380,000
What is the marginal product of labor and what is the average product of labor
What will be an ideal response?
Which of the following statements is (are) correct? The Federal Reserve
a. can, over the long run, roughly control the money supply by changing the monetary base to offset any undesirable changes in the money stock as a result of changes in currency holdings or excess reserve holdings. b. controls the money supply better in the long-run because of short-run uncertainty regarding the money multiplier. c. is in absolute control of the money stock at all times. d. Both a and b
A profit-maximizing monopoly will always produce at the minimum point of its average total cost (ATC) curve
a. True b. False