Use the Figure Below to Answer the Following Question(s)

question 15

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 12-3
-Refer to Figure 12-3. If an economy is currently operating at Y₁, which of the following would a Keynesian economist be most likely to favor?

• A)a shift in the federal budget toward a surplus
• B)a shift in the federal budget toward a deficit
• C)a balanced budget
• D)an increase in taxes

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Definitions:

Double-Digit Unemployment

A situation where the unemployment rate reaches or exceeds 10 percent, indicating a high level of joblessness.

Stagflation

A condition of slow economic growth and relatively high unemployment—a period of stagflation—accompanied by rising prices (inflation).

Misery Index

An economic indicator created by summing the unemployment rate and inflation rate, aiming to provide a snapshot of the average citizen's economic well-being.

Unemployment Rate

The percentage of the total labor force that is unemployed but actively seeking employment and willing to work.