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.

---

Definitions:

Intermediate Product

A product that requires further processing before it becomes a finished good.

Beet Juice

The liquid extracted from beetroot, often used as a natural colorant in food products, or consumed for its nutritional benefits.

Refined Sugar

Sugar that has undergone a process to remove impurities and unwanted components, resulting in pure, crystalline sucrose.

Industrial Fiber

Man-made or natural fibers primarily used in the production of durable goods and industrial products instead of consumer apparel.