Figure 12-2 -Refer to Figure 12-2. Suppose Real GDP Is Equal to Is

question 108

Multiple Choice

Figure 12-2
-Refer to Figure 12-2. Suppose real GDP is equal to Y_r. If policymakers want to close the output gap with demand management policies, what should they do?

• A) lower corporate profit tax rates to encourage investments
• B) increase investment tax credits to businesses
• C) decrease government spending on transfer payments and on final goods and services
• D) lower interest rates

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