If Real Equilibrium GDP Is Below the Long-Run Aggregate Supply

question 77

Multiple Choice

If real equilibrium GDP is below the long-run aggregate supply curve, an appropriate fiscal policy would be to:

• A)increase government purchases and increase a budget deficit.
• B)pursue a contractionary fiscal policy by increasing the budget surplus.
• C)increase individual income taxes to balance the budget.
• D)increase business income taxes to increase tax fairness.

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Definitions:

Social Class Ladder

A metaphorical representation of the stratification and hierarchical nature of society based on socio-economic status.

Societal Changes

Alterations in the social structures, institutions, and patterns of behavior within a society over time.

Hypogamy

Marrying “down” in the social class hierarchy.

Hypergamy

Marrying “up” in the social class hierarchy.