Use the Following to Answer Questions

question 76

Multiple Choice

Use the following to answer questions:
-(Figure: Fiscal Policy Choices) Refer to Figure: Fiscal Policy Choices. If the government uses discretionary fiscal policy for the economy in panel (a) when real GDP is Y₁, government spending is likely to be _____ and taxes are likely to be _____.

• A) reduced; cut
• B) increased; increased
• C) reduced; increased
• D) increased; cut

---

Definitions:

Yugoslavia

A former country in Southeast Europe that existed from 1918 to 1992, known for its diverse culture and ethnicity.

Overhead Costs

Expenses associated with running a business that are not directly tied to a specific product or service, such as rent and utilities.

Contributing Factor

An element that plays a part in causing a situation or outcome.

Circumstantial Factor

An element or condition that affects a situation but is not a direct cause; often considered in evaluations or analysis of outcomes.