Use the Following to Answer Questions

question 82

Multiple Choice

Use the following to answer questions:
-(Figure: Fiscal Policy II) Refer to Figure: Fiscal Policy II. Suppose that this economy is in equilibrium at E₁. If there is a decrease in government transfers, _____ will shift to the _____, causing a(n) _____ in the price level and a(n) _____ in real GDP.

• A) AD_2; left; increase; decrease
• B) AD_2; left; decrease; decrease
• C) AD_1; right; increase; increase
• D) AD_1; left; decrease; decrease

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Definitions:

Enter Bill

The process of recording an invoice received from a vendor or supplier into the accounting system.

Merchandise Company

A business entity primarily engaged in the retail or wholesale buying and selling of goods for profit.

Opening Adjusting Entry

An entry made in the books at the beginning of an accounting period to adjust the balances of accounts from the previous period, ensuring accurate and up-to-date financial records.

Opening Balance Equity

An account used in accounting to balance the books when starting a new company file or reconciling accounts.