Exhibit 14A-1 Aggregate Demand and Supply Model

question 62

Multiple Choice

Exhibit 14A-1 Aggregate demand and supply model

As shown in Exhibit 14A-1 and assuming the aggregate demand curve shifts from AD ₁ to AD ₂ , the full-employment level of real GDP is:

• A) $12 billion.
• B) $8 billion.
• C) $150 billion.
• D) unable to be determined.

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Definitions:

Federal Government

The national government of a federal country that shares power with regional governments like states or provinces.

Proprietary Income

Income generated from owned properties or businesses, exclusive to the owner or proprietor.

Excise Tax

A tax charged on specific goods or commodities produced or sold within a country and often included in the price of the product.

Tax Revenue

The income a government collects from taxes, used to fund public services and infrastructure.