Use the Following to Answer Questions

question 116

Multiple Choice

Use the following to answer questions .
Exhibit: Fiscal Policy 1
-(Exhibit: Fiscal Policy 1) If discretionary fiscal policy is used to eliminate the gap, policy actions will

• A) shift the aggregate demand curve to the right until long-run equilibrium is restored at a price level, P₁ and output level, Y_p.
• B) shift the short-run aggregate supply curve to the right until long-run equilibrium is restored at a price level, P₁ and output level, Y_p.
• C) shift the aggregate demand curve to the right until long-run equilibrium is restored at a price level, P₂ and output level, Y_p.
• D) shift the aggregate demand curve and the short-run aggregate supply curve to the right until long-run equilibrium is restored at a price level corresponding to point d and output level, Y_p.

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Definitions:

Emotion

Feeling, or affect, that can involve physiological arousal (such as a fast heartbeat), conscious experience (thinking about being in love with someone), and behavioral expression (a smile or grimace).

Sympathetic Nervous System

Part of the autonomic nervous system that activates what is often termed the fight or flight response.

Autonomic Nervous System

The body system that takes messages to and from the body’s internal organs, monitoring such processes as breathing, heart rate, and digestion.

Cerebral Cortex

Part of the forebrain, the outer layer of the brain, responsible for the most complex mental functions, such as thinking and planning.