If the Current Equilibrium Output Lies Above Potential Output, Then

question 67

Multiple Choice

If the current equilibrium output lies above potential output, then an appropriate fiscal policy would be to _____, which will shift the AD curve to the _____.

• A) decrease government purchases; right
• B) increase government purchases; left
• C) decrease government purchases; left
• D) raise tax rates; right

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Definitions:

Gross Margin

Gross margin is a company's net sales revenue minus its cost of goods sold, representing the efficiency with which it can produce and sell its products for a profit.

Scattergraph Method

A graphical technique used to identify the relationship between two variables, often used in cost analysis to distinguish between fixed and variable costs.

Cost Estimates

Approximations of the cost to complete a project, manufacture a product, or provide a service, based on available information.

Regression Line

A statistical tool used to describe the relationship between a dependent variable and one or more independent variables, often represented as a straight line in linear regression.