Exhibit 11-4 -Refer to the Graph in the Exhibit.Which One of the Exhibit.Which

question 4

Multiple Choice

Exhibit 11-4

-Refer to the graph in the exhibit.Which one of the following sets of policies would move the economy to full employment?  

• A) increase government purchases, increase taxes, and decrease transfer payments
• B) decrease government purchases, increase taxes, and decrease transfer payments
• C) increase government purchases, decrease taxes, and increase transfer payments
• D) increase government purchases, increase in taxes, and increase transfer payments

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Definitions:

Wage Differentials

The differences in wage rates due to the variations in the skill level, occupation, region, and other factors affecting compensation.

Diminishing Returns

The principle stating that as one factor of production is increased while others are held constant, a point will eventually be reached where additions of the factor yield progressively smaller increases in output.

Value Added

The increase in worth of a product or service as a result of a particular stage of production or as it moves through the supply chain.

Marginal Product

The increase in output resulting from a one-unit increase in the amount of a single input used, keeping all other inputs constant.