Suppose the Economy Is at a Short-Run Equilibrium with Real

question 211

Multiple Choice

Suppose the economy is at a short-run equilibrium with real GDP reater than potential GDP . Which of the following fiscal policies would decrease real GDP and the price level?

• A) an increase in government expenditure
• B) an increase in taxes
• C) a decrease in taxes
• D) None of the above answers is correct.

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Definitions:

Cryosurgery

A surgical technique that uses extreme cold to freeze and destroy abnormal tissue.

Hepatitis B

A viral infection that affects the liver, transmitted through contact with infected bodily fluids, potentially causing chronic liver disease and liver cancer.

Sexual Contact

Any form of touch or interaction, consensual or not, that is of a sexual nature, potentially including activities from kissing to sexual intercourse.

Hepatitis A

A highly contagious liver infection caused by the hepatitis A virus, often spread through ingestion of contaminated food or water.