Use the Following to Answer Questions

question 43

Multiple Choice

Use the following to answer questions:
-(Figure: Short- and Long-Run Equilibrium II) Refer to Figure: Short- and Long-Run Equilibrium II. Which action would be the appropriate response on the part of the government upon viewing the state of the economy?

• A) Increase government spending to close the recessionary gap.
• B) Decrease government spending to close the recessionary gap.
• C) Lower tax rates to close the inflationary gap.
• D) Raise tax rates to close the inflationary gap.

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Definitions:

Competitive

A trait or situation where individuals or entities strive against each other to achieve a goal or superiority.

Type B Personality Style

A personality pattern in which a person is more relaxed, less aggressive, and less concerned about time.

Relaxed

A physical and mental state characterized by reduced tension and anxiety.

Aggressive

Refers to a range of behaviors that can result in both physical and psychological harm to oneself, others, or objects in the environment.