Use the Following Figure to Answer the Questions : Figure

question 38

Multiple Choice

Use the following figure to answer the questions : Figure 8.5:
-In Figure 8.5,according to Keynesians,if equilibrium real output is Q₁ and full-employment real output is Q₂,an appropriate fiscal policy lever would be to

• A)Increase AD by increasing income taxes.
• B)Increase AD by increasing government spending.
• C)Increase AS by reducing government regulations.
• D)Reduce AS by tightening air pollution standards to improve air quality.

---

Definitions:

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.

Sales Revenue

The total amount of money generated by a company from its sales of goods or services before any expenses are subtracted.

Variable Cost

Costs that adapt in response to modifications in business activity volume.

Fixed Cost Per Unit

The total fixed costs of production divided by the number of units produced, indicating how cost allocation changes with production volume.