Exhibit 20A-2  Macro AD/AS Models in Panel (A) of Exhibit

question 117

Multiple Choice

Exhibit 20A-2  Macro AD/AS Models In Panel (a) of Exhibit 20A-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.

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Definitions:

Conversion

The process of changing or converting resources into finished goods or services, often used in accounting and manufacturing to describe the transformation of raw materials into products.

Gains Or Losses

The financial result from selling assets for more or less than their carrying amount on the balance sheet.

Debenture Bonds

Bonds issued against the general credit of the borrower. Also called unsecured bonds.

Credit Ratings

Assessments of the creditworthiness of both borrowers (including governments, businesses, and individuals) and financial instruments, expressed through a grading system.