If There Is an Inflationary Gap in the Economy, Discretionary

question 7

Multiple Choice

If there is an inflationary gap in the economy, discretionary fiscal policy would likely involve Jan action to

• A) shift the aggregate demand curve to the right.
• B) shift the aggregate demand curve to the left.
• C) shift both the aggregate demand curve and aggregate supply curve to the right.
• D) shift both the aggregate demand curve and aggregate supply curve to the left.

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Definitions:

Financing Activities

Activities that result in changes in the size and composition of the equity and/or borrowings of a company.

Cash Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits.

Net Cash

The balance of cash remaining once cash inflows and outflows have been reconciled.

Investing Activities

Financial transactions and events related to the acquisition or disposal of long-term assets and investments.