Use the Following to Answer Questions

question 111

Multiple Choice

Use the following to answer questions:
Figure: AD-AS Model II
-(Figure: AD-AS Model II) Refer to Figure: AD-AS Model II. If there is a significant increase in government spending, in the short run the _____ curve will shift to the _____.

• A) SRAS; left
• B) SRAS; right
• C) AD; left
• D) AD; right

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Definitions:

Long-term Capital Gain

Profit from the sale of an asset held for more than one year, typically taxed at a lower rate than regular income.

Section 1245

A section of the tax code that involves recapturing depreciation on certain types of property as ordinary income upon sale.

Section 1231 Gain

A gain from the sale or exchange of property used in a business, subject to favorable tax treatment under Section 1231 of the U.S. tax code.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.