On an Aggregate Supply and Aggregate Demand Graph, If the Short-Run

question 28

Multiple Choice

On an aggregate supply and aggregate demand graph, if the short-run equilibrium is above full employment, which of the following fiscal policies could be used to move the economy to full-employment?

• A) Decrease government spending to shift the aggregate demand curve to the left.
• B) Increase government spending to shift the aggregate demand curve to the right.
• C) Increase taxes to shift the short-run aggregate supply curve to the right.
• D) Decrease taxes to shift the short-run aggregate supply curve to the left.

---

Definitions:

Nominal Interest

The rate of interest before adjustment for inflation, representing the face value of borrowed money and the income from lending investments.

Frictional Unemployment

A form of unemployment that occurs when individuals are temporarily between jobs, entering the workforce, or transitioning from one position to another.

Job Search

The process by which individuals seek to find new employment, utilizing various methods and resources to discover job opportunities.

Challenging Work

Challenging Work refers to job tasks that are demanding but provide a sense of accomplishment and progression, often leading to increased job satisfaction and motivation.