Figure 12-3 -Refer to Figure 12-3. Suppose the Aggregate Demand Curve Is

question 78

Multiple Choice

Figure 12-3
-Refer to Figure 12-3. Suppose the aggregate demand curve is AD₁. All of the following events Jwould more likely bring the economy back to the natural rate of unemployment except

• A) The government orders a one-time surcharge of 10% to be added to individual income tax liabilities.
• B) Businesses increase investment in response to tax breaks for businesses.
• C) The Federal Reserve buys bonds on the open market.
• D) The government orders a cut in withholding rates designed to increase disposable income and boost consumption.

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Definitions:

Discounted Note

A promissory note sold at a discount from its face value, where the difference between the purchase price and the value at maturity represents the interest income for the investor.

Maturity Value

The amount payable to the holder of a financial instrument at its maturity date, including the principal and any accrued interest.

Interest

The cost paid for borrowing money, typically expressed as a percentage of the total amount loaned.

Periodic Inventory

An inventory accounting system where inventory and cost of goods sold are determined at the end of an accounting period based on a physical count.