When the Macro Equilibrium Is Above Full Employment,fiscal Policy Should

question 127

Multiple Choice

When the macro equilibrium is above full employment,fiscal policy should be used to shift aggregate demand by the amount of

• A)The difference between saving and investment.
• B)The difference between desired saving and desired investment.
• C)The AD excess,which also allows for price level changes.
• D)None of the choices are correct.

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Definitions:

Profit-Maximizing Level

The production output level at which a business achieves the highest possible profit, where marginal cost equals marginal revenue.

Total Labor Cost

The complete expenditure incurred by an employer for the compensation of employees, including wages, benefits, and taxes.

Profit-Maximizing Level

The point at which a company can achieve the highest profit, where marginal revenue equals marginal cost.

Total Revenue

The entire amount of income generated by the sale of goods or services before any expenses are subtracted.