Use the Following to Answer Questions

question 377

Multiple Choice

Use the following to answer questions:
Figure: Fiscal Policy Options
-(Figure: Fiscal Policy Options) Look at the figure Fiscal Policy Options. If the aggregate demand curve is ADʺ, the most appropriate discretionary fiscal policy is to _____ government spending and _____ income tax rates.

• A)increase; decrease
• B)increase; maintain
• C)decrease; decrease
• D)decrease; maintain

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Definitions:

Social Security Contributions

Payments made to a government scheme that provides benefits to employees and their families for retirement, disability, and death.

Payroll Taxes

Payroll taxes are levied on either employers or employees, typically based on a percentage of the wages paid by employers to their workers.

Income Tax Schedule

A chart or table used by taxpayers to determine their tax rate based on income levels, as specified by tax law.

Average Tax Rate

The percentage of income that is paid to the government as tax, calculated by dividing the total tax amount by the total income.