Which of the Following Would Be the Theoretical Outcome of Contractionary

question 29

Multiple Choice

Which of the following would be the theoretical outcome of contractionary fiscal policy in the following aggregate demand-aggregate supply model, where LRAS is long-run aggregate supply and SRAS is short-run aggregate supply?

• A) The aggregate demand A
• D) curve would shift from AD₁ to AD₂.
• B) The short-run aggregate supply SRA
• S) curve would shift from SRAS₂ to SRAS₁.
• C) The short-run aggregate supply SRA
• S) curve would shift from SRAS₁ to SRAS₂.
• D) The aggregate demand A
• D) curve would shift from AD₁ to AD₂ at the same time that the SRAS curve would shift from SRAS₁ to SRAS₂.
• E) The aggregate demand A
• D) curve would shift from AD₂ to AD₁.

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Definitions:

Shareholders Plan

A strategy or arrangement developed to protect the interests of shareholders, often used in the context of mergers and acquisitions to ensure fair treatment and value.

Corporate Veil

A legal concept that separates the actions of a corporation from the personal liabilities of its shareholders, protecting them from being personally liable for the company's debts and obligations.

Controlling Shareholder

An individual or entity that owns a majority of a company's shares, granting them significant influence or control over the company's operations and decisions.

Separate Corporate Boundaries

A principle that maintains the legal independence between a corporation and its shareholders, protecting personal assets from business liabilities.