When the Economy Is Operating Well Below Capacity, an Increase

question 39

Multiple Choice

When the economy is operating well below capacity, an increase in spending tends to be reflected primarily in a/an:

• A) lower level of employment.
• B) increase in price.
• C) lower level of output.
• D) higher level of output and employment.

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Definitions:

Single Payer

A healthcare finance mechanism where a single public or quasi-public agency organizes health care financing, but delivery of care remains largely in private hands.

Budget Deficit

A situation where a government's expenditures surpass its revenues within a specific fiscal period, leading to borrowing or debt accumulation.

Price Floor

A legally established minimum price that can be charged for a good or service, typically above the equilibrium price, to prevent market prices from falling too low.

Subsidy

A financial grant or support extended by the government to individuals, businesses, or industries to encourage certain activities or lower their costs.