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

question 85

Multiple Choice

Figure 12-3
-Refer to Figure 12-3. If the aggregate demand curve is AD₂, which of the following is the most appropriate discretionary fiscal policy to pursue?

• A) a contractionary fiscal policy involving reductions in government spending and decreases in income tax rates
• B) a contractionary fiscal policy involving reductions in government spending and increases in income tax rates
• C) an expansionary fiscal policy involving increases in government spending and increases in income tax rates
• D) an expansionary fiscal policy involving increases in government spending and decreases in income tax rates

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Definitions:

Drive

An internal urge that motivates behavior towards fulfilling a need or achieving a goal.

Motivation Theorist

An individual who studies and develops concepts explaining why people are driven to meet certain needs or pursue particular goals.

Biological Needs

Essential physiological requirements that maintain life, such as the need for oxygen, food, water, and sleep.

Social Needs

Human needs that relate to interaction with others, including belonging, love, and affection, often positioned as essential for psychological well-being.