In the Short Run,a Contractionary Fiscal Policy Would Cause

question 44

Multiple Choice

In the short run,a contractionary fiscal policy would cause

• A) the AD curve to shift to the right
• B) equilibrium real GDP to decrease and the price level to increase
• C) the AS curve to shift left
• D) the economy to slide along the AD curve
• E) equilibrium GDP and the price level to fall

Understand historical economic theories and policies and their effects on modern economics.

Understand the factors contributing to long-term economic growth.

Comprehend the differences between recessions and depressions in terms of severity, duration, and economic indicators.

Recognize the phases and characteristics of economic expansions and contractions.

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Definitions:

Negative Income Tax

A welfare system proposed to provide income support to individuals or families that earn below a certain level, effectively subsidizing their income to reach a minimum threshold.

In-kind Transfers

Non-cash payments or goods and services provided to individuals as part of government assistance programs, instead of cash.

Cash Payments

are transactions where the exchange of goods or services occurs via the physical exchange of currency, as opposed to credit or digital payment.

Minimum-wage Law

Rules determining the minimum legal hourly pay rate for employees by their employers.