If Real Equilibrium GDP Is Below the Long-Run Aggregate Supply

question 77

Multiple Choice

If real equilibrium GDP is below the long-run aggregate supply curve, an appropriate fiscal policy would be to:

• A)increase government purchases and increase a budget deficit.
• B)pursue a contractionary fiscal policy by increasing the budget surplus.
• C)increase individual income taxes to balance the budget.
• D)increase business income taxes to increase tax fairness.

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Definitions:

Dissociation

A psychological experience in which people feel disconnected from their bodily sensations, feelings, thoughts, or sense of identity.

Split In Consciousness

Refers to a division or dissociation of awareness, whereby an individual may simultaneously hold separate streams of conscious perception or thought.

Selective Attention

The process by which a person focuses on certain sensory inputs while ignoring others.

Inattentional Blindness

The psychological phenomenon where a person fails to see an unexpected object in their field of vision because their attention is focused on something else.