Use the Figure Below to Answer the Following Question(s)

question 95

Multiple Choice

Use the figure below to answer the following question(s) . Figure 12-2
Refer to Figure 12-2. If an economy is operating in the short run at point a, Keynesian analysis indicates that expansionary fiscal policy will

• A) increase AD and move the economy toward point b.
• B) increase AD and move the economy toward point c.
• C) increase SRAS and move the economy toward point b.
• D) decrease SRAS and move the economy toward point c.

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Definitions:

Recognised Assets

Assets that have been formally acknowledged and recorded on the balance sheet due to their probable future economic benefits.

Unrecognised Firm Commitments

Obligations or agreements that a company has committed to, but are not yet recorded on the balance sheet because they do not meet the recognition criteria.

Hedge Effectiveness

A measure of the degree to which a hedge transaction reduces the risk of the underlying exposure it was intended to hedge.

Hedge Exposure

A risk management strategy used to reduce or mitigate the risk of adverse price movements in an asset, typically through the use of derivative instruments.