​ ​ Exhibit 16A-2 Macro AD/AS Models

question 106

Multiple Choice

​ ​ Exhibit 16A-2 Macro AD/AS Models
​

​ In Panel (a) of Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y₁ and price level P₂. If the federal government or Fed decides to intervene, it would most likely:

• A) ​increase taxes.
• B) ​decrease the money supply.
• C) ​increase the level of government spending for goods and services.
• D) ​decrease the level of government spending for goods and services.

---

Definitions:

Choir Wall

The architectural element that separates the choir, the area where the altar is located, from the nave or main body of the church, often found in Christian churches.

Socially Efficient

A condition where resources are allocated in a way that benefits society as a whole and maximizes overall welfare.

Marginal Cost

Marginal cost is the change in total cost that arises when the quantity produced is increased by one unit; it is the cost of producing one additional unit of a product.

Quantity Of Output

The total amount of goods or services produced by a firm or economy within a specific period.