Figure 12-2 -Refer to Figure 12-2. If Discretionary Fiscal Policy Is Used

question 75

Multiple Choice

Figure 12-2
-Refer to Figure 12-2. If discretionary fiscal policy is used to eliminate the gap, policy actions
Will

• A) shift the aggregate demand curve to the left until long-run equilibrium is restored at a price level, P_j and output level, Y_p.
• B) shift the aggregate demand curve and the short-run aggregate supply curve to the left until long-run equilibrium is restored at a price level P_k and output level, Y_p.
• C) shift the aggregate demand curve to the left until long-run equilibrium is restored at a price level, P_r and output level, Y_p.
• D) shift the short-run aggregate supply curve to the left until long-run equilibrium is restored at a price level, P_r and output level, Y_p.

---

Definitions:

Common Carriage

The public transportation of goods or persons where the carrier offers services to the public under license or authority.

Bailments

A legal relationship in which physical possession of personal property is transferred from one person to another under agreement that the property will be returned or otherwise disposed of according to the owner's directions.

Innkeepers

Individuals or entities that operate lodging facilities, such as hotels or inns, and are responsible for the safety and well-being of their guests.

Liability

A legal responsibility or obligation that may arise from any act or failure to act.