Figure 27-8 -Refer to Figure 27-8. in the Graph Above, Suppose the Above

question 35

Multiple Choice

Figure 27-8
-Refer to Figure 27-8. In the graph above, suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B. Which of the following policies could the Congress and the president use to move the economy to point C?

• A) increase government purchases
• B) decrease government purchases
• C) increase income taxes
• D) sell Treasury bills

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Definitions:

Taxes

Obligatory charges imposed by the government on the earnings of employees, profits of companies, or included in the prices of various goods, services, and transactions.

Income Tax

A tax levied by governments on individuals or entities based on their income or profits.

Taxable Income

The amount of income subject to taxes, after deductions and exemptions, according to the tax laws governing the taxpayer.

Tax Rate

The percentage at which an individual or corporation is taxed by the government on income, property, or sales.