Suppose the Economy Is Operating Below Potential Output

question 105

Multiple Choice

Suppose the economy is operating below potential output. If policy makers try to avoid a budget deficit by raising taxes or reducing government spending, these actions would

• A) increase inflation.
• B) help pull an economy out of a depression.
• C) make a recession worse.
• D) negate the multiplier effect.

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Definitions:

Control Variable

A control variable is a factor in scientific experiments that is kept constant to test the relative impact of an independent variable.

Violent Media Content

Media that depicts scenes of physical or psychological violence, which is believed to influence viewers' attitudes and behaviors, particularly concerning aggression.

Gender

Social and cultural distinctions associated with being male, female, or non-binary, including roles, behaviors, activities, expectations, and identities.

Aggression

Behavior intended to harm or intimidate others, manifesting in physical, verbal, or psychological forms.