Figure 14-5 -Refer to Figure 14-5. to Eliminate the Output Gap, Policy

question 19

Multiple Choice

Figure 14-5
-Refer to Figure 14-5. To eliminate the output gap, policy makers could conduct

• A) an open market sale to raise interest rates and reduce investment spending which will shift the aggregate demand curve to the left.
• B) an open market sale to lower interest rates and stimulate investment spending which will shift the short-run aggregate supply curve to the right.
• C) an open market purchase to raise interest rates and reduce investment spending which will shift the aggregate demand curve to the left.
• D) an open market purchase to lower interest rates and stimulate investment spending which will shift the short-run aggregate supply curve to the left.

---

Definitions:

Short-Run Marginal Cost

The increase in cost incurred from producing one additional unit of a good or service in the short term, when some inputs or resources are fixed.

Swing Shift

A work shift that typically occurs in the afternoon and evening hours, bridging the gap between day and night shifts.

Time And A Half

An overtime pay rate that is 1.5 times an employee's normal hourly rate, typically paid for work done beyond standard working hours.

Pricing

The process of determining the value to be charged for a product or service.