Use the Following to Answer Questions

question 211

Multiple Choice

Use the following to answer questions
Figure: Aggregate Demand and Fiscal Policy
-(Figure: Aggregate Demand and Fiscal Policy) Refer to the figure.In the best case scenario,effective fiscal policy would take which action to correct an economy in recession at point Z?

• A) increase aggregate demand to move the economy to point X
• B) increase the LRAS curve to a level above 3%
• C) decrease the LRAS curve to a level below 2%
• D) increase aggregate demand to move the economy to point W

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Definitions:

Total Tax

The annual sum of all taxes owed by an individual or corporation, including federal, state, and local taxes, regardless of deduction or credit eligibility.

Taxable Income

The amount of income that is subject to income tax after deductions and exemptions.

Deductions

Amounts that are subtracted from gross income when calculating taxable income, including expenses, allowances, or specific exemptions.

Exemptions

Specific allowances that relieve individuals, organizations, or products from fulfilling certain conditions or requirements, often for taxes or regulations.