Figure 111 Shows the Relationship Between the Price Level and the the Real

question 27

Multiple Choice

Figure 11.1 shows the relationship between the price level and the real GDP. Which of the following sets of policies would unambiguously move the economy to full employment?

• A) Increase in government purchases, increase in taxes, and decrease in transfer payments
• B) Decrease in government purchases, increase in taxes, and decrease in transfer payments
• C) Increase in government purchases, decrease in taxes, and increase in transfer payments
• D) Increase in government purchases, increase in taxes, and increase in transfer payments
• E) Decrease in government purchases, decrease in taxes, and decrease in transfer payments

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Definitions:

Hot Dogs

A cooked sausage, usually grilled or steamed and served in a sliced bun as a fast food.

Coffee

A popular beverage made from roasted coffee beans, known for its stimulating effect due to caffeine content.

Underselling

The practice of selling goods or services at a lower price than competitors, potentially to gain market share.

Japanese Markets

Financial and product markets in Japan, encompassing stock exchanges, commodity trading, and consumer goods markets unique to the Japanese economy.