You Are Given the Following Information About Aggregate Demand at the Existing

question 32

Multiple Choice

You are given the following information about aggregate demand at the existing price level for an economy: (1) consumption = $500 billion, (2) investment = $50 billion, (3) government purchases = $100
Billion, and (4) net export = $20 billion. If the full-employment level of GDP for this economy is $620
Billion, then what combination of actions would be most consistent with closing the GDP gap here?

• A) increase government spending and taxes
• B) decrease government spending and taxes
• C) decrease government spending and increase taxes
• D) increase government spending and decrease taxes

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Definitions:

Profit

The financial gain that is made when the revenue from business activities exceeds its costs.

Limited Partnership

is a form of partnership characterized by having one or more general partners with unlimited liability, and one or more limited partners whose liability is limited to the amount of their investment.

Management Participation

The involvement or engagement of managerial staff in the planning and decision-making processes of a business or organization.

Liability

The state of being legally responsible for something, particularly in terms of debts or legal obligations.