-Refer to Exhibit 6-2

question 26

Multiple Choice

-Refer to Exhibit 6-2.The unemployment rate in year 3 is

• A) 12 1/2 percent.
• B) 33 1/3 percent.
• C) 50 percent.
• D) 66 2/3 percent.
• E) 25 percent.

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Definitions:

Fiscal Policy

Government policies related to taxation and spending designed to influence economic conditions, including demand, employment, and inflation.

Aggregate Demand

The entirety of demand for products and services in an economy, pegged at a general price level during an established time frame.

Government Spending

The total amount of money that a government expends in a specific time period, which can include investments in infrastructure, welfare programs, and military expenditure.

Tax Receipts

The cumulative sum of taxes gathered by a government from both companies and individuals.