Use the Following to Answer Questions

question 159

Multiple Choice

Use the following to answer questions :
Figure: Fiscal Policy Choices
-(Figure: Fiscal Policy Choices) Look at the figure Fiscal Policy Choices. If the government uses discretionary fiscal policy for the economy in panel (b) when real GDP is Y₁, government spending is likely to be _____ and taxes are likely to be _____.

• A)reduced; cut
• B)increased; increased
• C)reduced; increased
• D)increased; cut

---

Definitions:

Advertised Prices

The prices of products or services as publicized through various media channels to inform potential consumers.

Ford Escorts

A model of compact car that was manufactured by Ford Motor Company, popular in various markets from the late 1960s to the early 2000s.

Predict

To declare or indicate in advance; especially, using data and analysis to forecast the occurrence of an event or trends.

Yachts

A type of recreational boat or ship, often luxurious and used for personal pleasure or sports.