The figure above shows an economy's aggregate demand curve and aggregate supply curve.
-Suppose the shift from AD₀ to AD₁ and from AS₀ to AS₁ in the figure above is the result of fiscal policy.Which of the policies below could lead to these shifts?
i.An increase in government expenditure
ii.A tax cut
iii.A decrease in government expenditure
iv.A tax increase
Definitions:
Accrual Accounting
An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash transaction takes place.
Sustainable Annualized
Reflects the ability to maintain performance or activity levels over a year considering current resources and capacities.
Long-Run Future
A perspective focusing on an extended period, considering long-term outcomes, trends, and potential impacts beyond immediate short-term considerations.
Free Cash Flow Valuation
A method to value a company based on the cash flows available after funding operations and capital expenditures.
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