FIGURE 22-5 Refer to Figure 22-5,Diagram 2

question 57

Multiple Choice

FIGURE 22-5 Refer to Figure 22-5,Diagram 2.Which of the following fiscal policy measures could the government implement to return national income to the full-employment level of GDP (potential output,Y*) ?

• A)reduce government spending
• B)reduce transfer payments
• C)increase taxes
• D)increase government spending
• E)decrease disposable income

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Definitions:

Available Balance

The amount of funds in an account that is accessible for withdrawal or use, taking into account any holds or pending transactions.

Initial Cash Balance

The amount of cash a company has at the beginning of a financial period.

Speculative Motive

The intention to hold cash or other assets in anticipation of profit from fluctuations in their prices or exchange rates.