When Total Expenditures Exceed the Economy's Potential GDP, the Proper

question 119

Multiple Choice

When total expenditures exceed the economy's potential GDP, the proper fiscal policy is to

• A)increase transfer payments to the poor and elderly.
• B)cut personal income tax rates.
• C)decrease government purchases.
• D)increase purchasing power.

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Definitions:

Hypothesis

A suggested explanation for an observed event, intended as an initial point for more detailed research.

Earth's History

A chronological description of the physical and biological events that have occurred on Earth from its formation to the present.

Precambrian

A very long interval of geologic time, from the formation of the solid earth to the beginning of the Paleozoic; it is equivalent to 90% of geologic time.

Precambrian

Referring to the eon that constitutes the earliest part of Earth's history, which ended approximately 542 million years ago.