Suppose the Economy Is at a Short Run Equilibrium in Recession.Which

question 112

Multiple Choice

Suppose the economy is at a short run equilibrium in recession.Which of the following fiscal policies would decrease output and prices in the short run?

• A)an increase in government spending
• B)a reduction in taxes
• C)an increase in taxes
• D)an increase in interest rates

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Definitions:

Variable Costing

An accounting method that considers only variable production costs (costs that change with the level of output) in the calculation of product costs.

Unit Product Cost

The total cost associated with producing one unit of a product, including both variable and fixed costs.

Variable Costing

An accounting method that includes only variable production costs (direct labor, direct materials, and variable manufacturing overhead) in product costs.

Cost-Volume-Profit Analysis

An accounting technique used to determine how changes in costs and sales volume affect a company's operating income and net income.