Use the Following to Answer Questions

question 176

Multiple Choice

Use the following to answer questions:
Figure: Short- and Long-Run Equilibrium II
-(Figure: Short- and Long-Run Equilibrium II) Look at the figure Short- and Long-Run Equilibrium II. If the economy is at equilibrium at E₁, the appropriate policy to return the economy to potential output would be a(n) :

• A)increase in government spending.
• B)decrease in government spending.
• C)increase in transfer payments.
• D)decrease in taxes.

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Definitions:

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its share price, often used by investors to gauge the income a company's stock will generate.

Dividend

A portion of a company's earnings that is distributed to shareholders, usually as cash or additional shares, as a reward for their investment in the company's equity.