Use the Following to Answer Questions

question 73

Multiple Choice

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

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

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Definitions:

Domestic Economic Problems

encompass challenges within a country's economy, such as unemployment, inflation, and deficits, affecting the quality of life of its citizens.

1945-1948

A period immediately after World War II, marked by significant geopolitical changes, including the start of the Cold War and the establishment of the United Nations.

Nation's Poorest Group

The demographic segment within a country that has the lowest income and living standards, often facing significant economic hardships.

Second World War

A worldwide war that occurred between 1939 and 1945, engaging the majority of the globe's countries, among them all the major powers, which ultimately divided into two rival military factions: the Allies and the Axis.