Suppose the Equilibrium Level of Income Exceeds the Full Employment

question 87

Multiple Choice

Suppose the equilibrium level of income exceeds the full employment level of income and there is high inflation.Hence, the government decides to implement a fiscal policy that will act to reducenational output and prices.This can be accomplished by:

• A)increasing government spending such that aggregate expenditures are increased.
• B)raising taxes and government spending by the same amount such that aggregate supply is decreased and aggregate demand is increased.
• C)decreasing government spending such that aggregate demand is reduced.
• D)lowering average tax rates such that aggregate supply is increased.
• E)increasing transfer payments such that aggregate expenditures decline.

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Definitions:

Employee Voice

The means by which workers express their opinions, grievances, and suggestions regarding workplace policies and practices.

Steel Industry

A sector of the economy focused on the production, processing, and sale of steel and steel products.

Unionize

The act of forming or joining a union to collectively bargain for improved working conditions, wages, and benefits.

Open Shop Movement

Advocacy for workplaces where union membership is not a condition of employment, allowing employees the choice to join or not join a union.