If the Economy Is Falling Below Potential Real GDP, Which

question 63

Multiple Choice

If the economy is falling below potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply?

• A)an increase in the money supply and a decrease in interest rates
• B)an increase in government purchases
• C)an increase in oil prices
• D)an increase in taxes
• E)a decrease in the supply government services

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Definitions:

Tariff Rates

Tariff rates are taxes imposed by a government on goods and services imported from other countries, used to control trade policies.

Republicans

A member or supporter of the Republican Party in the United States, traditionally advocating for conservative policies, limited government, and a market-oriented economy.

Populists

A political approach aiming to represent the interests and voices of ordinary people, often against the elite or established structures of power.

Jacob S. Coxey

An American politician, known for leading the "Coxey's Army" march on Washington D.C. in 1894 to advocate for unemployed workers and public infrastructure jobs.