If the Current Equilibrium Output Lies Above Potential Output, Then

question 67

Multiple Choice

If the current equilibrium output lies above potential output, then an appropriate fiscal policy would be to _____, which will shift the AD curve to the _____.

• A) decrease government purchases; right
• B) increase government purchases; left
• C) decrease government purchases; left
• D) raise tax rates; right

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Definitions:

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A legal structure where an individual's financial risk is limited to a fixed amount, typically the value of their investment in a company.

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A business owned and operated by a single individual, with no distinction between the business and owner legally or financially.

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The act of granting permission to use intellectual property rights, such as trademarks, patents, or software, under specified conditions.