A Contractionary Fiscal Policy Shifts the Aggregate Demand Curve

question 146

Multiple Choice

A contractionary fiscal policy shifts the aggregate demand curve

• A) to the right and is used to close an inflationary gap.
• B) to the right and is used to close a recessionary gap.
• C) to the left and is used to close an inflationary gap.
• D) to the left and is used to close a recessionary gap.

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Definitions:

Conversion Costs

Expenses incurred when converting raw materials into finished products, typically including labor and overhead costs.

Factory Supervisor's Salary

The remuneration paid to individuals responsible for managing the operations and employees within a manufacturing plant.

Direct Cost

Expenses directly linked to the creation of particular products or services, including raw materials and labor.

Indirect Cost

Costs that are not directly attributable to a specific job, product, or activity, often including overhead expenses like utilities and rent.