​The Figure Given Below Depicts Short-Run Equilibrium in an Aggregate

question 68

Multiple Choice

​The figure given below depicts short-run equilibrium in an aggregate demand-aggregate supply model.If the economy is at point "e" in the short run,which of these policies adopted by the Fed is likely to return it to long-run equilibrium? ​
Figure 15.3

• A)A decrease in government spending
• B)An increase in the tax rate
• C)A decrease in the tax rate
• D)A decrease in the money supply
• E)An increase in the money supply

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Definitions:

Deferred Tax Asset

An accounting term for items that will reduce future tax payments, such as carryover losses or credits.

Book Income

The net income reported by a company as per its financial statements, reflecting its accounting principles rather than taxable income.

Interperiod Tax Allocation

The process of distributing tax expenses or benefits over different accounting periods due to temporary differences between financial accounting and tax accounting rules.

Effective Tax Rate

The average rate at which an individual or corporation is taxed, calculated by dividing the total tax paid by taxable income.