Which of the Following Explains Why the Government Should Not

question 14

Multiple Choice

Which of the following explains why the government should not increase spending by the entire amount of the AD shortfall to move the economy to full employment?

• A)Price level changes will make up for the difference between the fiscal stimulus and the AD shortfall.
• B)The multiplier process will contribute to an additional increase in aggregate demand that will cause an inflationary gap.
• C)The government can increase taxes to create an additional increase in aggregate demand.
• D)The price level is constant.

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Definitions:

Morality

A code of conduct that, given specified conditions, would be put forward by all rational persons.

Virtue Ethicist

A philosopher or ethicist who emphasizes virtues, or moral character, as the basis for ethical behavior.

Principles of Duty

Fundamental ethical rules or guidelines that dictate what individuals ought to do, often based on moral obligations.

Ethical Philosophy

A branch of philosophy that involves systematizing, defending, and recommending concepts of right and wrong behavior.