Use the Following to Answer Questions

question 120

Multiple Choice

Use the following to answer questions :
Figure: AD-AS Model and the Short-Run Phillips Curve
-(Figure: AD-AS Model and the Short-Run Phillips Curve) Look at the figure AD-AS Model and the Short-Run Phillips Curve. If the central bank increases the money supply so that aggregate demand shifts from AD₁ to AD₂, then real GDP will increase by:

• A)zero.
• B)2%.
• C)4%.
• D)6%.

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Definitions:

Taxable Income

The amount of an individual's or a corporation's income used to determine how much tax they owe to the government in a given tax year.

Deductions

Amounts that are subtracted from income before it is subjected to taxation, decreasing the total taxable income amount.

Transfer Payments

Payments made by governments to individuals without any expectation of a direct return or exchange, such as welfare benefits or social security.

Government Spending

Expenditures made by the government in any given period, including on services, salaries, and infrastructure projects.