If the Economy Is in an Equilibrium with Real GDP

question 108

Multiple Choice

If the economy is in an equilibrium with real GDP less than potential GDP,a fiscal stimulus could move the economy toward potential GDP by simultaneously ________ taxes and ________ government expenditures on goods and services.

• A)raising;increasing
• B)raising;decreasing
• C)cutting;increasing
• D)cutting;decreasing
• E)raising;not changing

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Definitions:

Kinesthetic Sense

The awareness of body position and movement, often referred to as muscle memory or the sense of bodily movement.

Gate-Control Theory

A theory that suggests pain is modulated by a neurological "gate" in the spinal cord which can open or close to either allow or block pain signals to the brain.

Endorphins

Neurotransmitters produced by the brain that act as natural painkillers and also boost feelings of pleasure or well-being.

Gate-Control Theory

A theory proposing that the spinal cord contains a neurological "gate" that either blocks pain signals or allows them to pass to the brain.