FIGURE 24-1 Refer to Figure 24-1

question 103

Multiple Choice

FIGURE 24-1 Refer to Figure 24-1.Suppose the economy is currently in a short-run equilibrium with output of Y₀.An appropriate fiscal policy response,to attain potential output (Y^*) ,is

• A)an increase in personal income taxes.
• B)a reduction in government purchases of goods and services.
• C)an increase in corporate income taxes.
• D)an increase in government purchases.
• E)an increase in interest rates to encourage increased saving.

---

Definitions:

Marginal Cost

The extra expense linked to generating one more unit of a product or service.

Inverse Demand

A representation of demand that shows how the price of a good or service can vary inversely with changes in the quantity demanded.

Typeset

The composition of text by arranging physical or digital type to make written language legible, readable, and appealing when displayed.

Marginal Cost

The financial outlay required to produce an additional unit of a product or service.