The Figure Above Shows an Economy's Aggregate Demand Curve and Aggregate

question 73

Multiple Choice

The figure above shows an economy's aggregate demand curve and aggregate supply curve.
-Suppose the shift from AD₀ to AD₁ and from AS₀ to AS₁ in the figure above is the result of fiscal policy. Which of the policies below could lead to these shifts?
i. An increase in government expenditure
ii. A tax cut
iii. A decrease in government expenditure
iv. A tax increase

• A) iv only
• B) iii and iv
• C) i and iv
• D) i and ii
• E) i only

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Definitions:

Sole Proprietorship

A business structure where a single individual both owns and runs the company, often leading to simpler administrative requirements but unlimited personal liability.

Government Regulations

Laws and rules established by governmental agencies that businesses must follow to ensure compliance with standards and protections for consumers, employees, and the environment.

Chief Accounting Officer

This is an executive role responsible for overseeing the accounting operations and financial reporting of a company.

Corporation

A legal entity that is separate from its owners, who own shares in the company and have limited liability.