If the Government Wants to Close a GDP Gap, It

question 47

Multiple Choice

If the government wants to close a GDP gap, it should

• A) raise government spending, thereby shifting the aggregate demand curve to the left.
• B) lower taxes, thereby shifting the aggregate demand curve to the right.
• C) lower government spending, thereby shifting the aggregate supply curve to the left.
• D) raise taxes, thereby shifting the aggregate supply curve to the right.
• E) raise both government spending and taxes by the same amount, thereby shifting the aggregate demand curve to the left.

---

Definitions:

Variable Cost

Costs that change in proportion to the level of production or sales volume.

Net Operating Income

A company's total income from its operations, excluding taxes and interest.

Monthly Sales

The total revenue generated from sales activities during a specific month.

Target Profit

The specific amount of profit a company aims to achieve within a specific period.