In a Certain Year the Aggregate Amount Demanded at the Existing

question 207

Multiple Choice

In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases.Full-employment GDP is $200 billion.To obtain full employment under these conditions, the government should

• A)encourage personal saving by increasing the interest rate on government bonds.
• B)decrease government expenditures.
• C)reduce tax rates and/or increase government spending.
• D)discourage private investment by increasing corporate income taxes.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or used up within one year or within the normal operating cycle of the business, whichever is longer.

Current Liabilities

A company's debts or obligations that are due within one year.

Quick Ratio

A measure of a company's ability to meet its short-term liabilities with its most liquid assets, providing insights into financial health.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business, whichever is longer.