-In the Above Figure, Which of the Following Policies Could

question 221

Multiple Choice

-In the above figure, which of the following policies could move the economy to potential GDP?

• A) decreasing government expenditures and increasing taxes
• B) decreasing taxes and not changing government expenditures
• C) increasing government expenditures and decreasing taxes
• D) None of the above answers is correct.

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Definitions:

Short Run

A period in which at least one factor of production is fixed, constraining the ability of a firm to adjust its output levels.

TVC

Total Variable Cost, which refers to the total of all costs that vary with the level of output or production activity.

Short Run

A period in economics during which at least one input, such as plant size, is fixed, and only some factors of production can be varied.

TC

Total Cost, which refers to the aggregate amount of expenses incurred by a business in producing goods or services.