The Figure Above Shows an Economy's Aggregate Demand Curve, Aggregate

question 4

Multiple Choice

The figure above shows an economy's aggregate demand curve, aggregate supply curve, and potential GDP.
-In the figure above, to use fiscal policy to move the economy back to potential GDP, the government must decrease government expenditure by ________ $1 trillion and/or increase taxes by ________ $1 trillion.

• A) recessionary; more than; more than
• B) inflationary; less than; more than
• C) inflationary; exactly; exactly
• D) inflationary; less than; less than
• E) recessionary; less than; less than

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Definitions:

Cultural Background

The background of a person or group defined by shared social practices, languages, customs, beliefs, and values.

Cultural Group

A collection of individuals who share common values, traditions, or behaviors based on ethnicity, religion, or societal norms.

Shared Traditions

Practices, beliefs, and customs that are common to a particular group, community, or culture, passed down through generations.

Behavioral Style

Refers to an individual's consistent pattern of behavior, reaction, and interaction with others and the environment.