When Spending by the Federal Government Exceeds Net Taxes

question 115

Multiple Choice

When spending by the federal government exceeds net taxes,

• A)the price level tends to rise
• B)the money supply must fall
• C)the aggregate demand curve shifts leftward
• D)aggregate supply moves leftward
• E)there is a federal budget surplus

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Definitions:

Marginal Cost

The additional cost incurred by producing one more unit of a product.

Average Variable Cost

The per unit cost of production excluding fixed costs, calculated by dividing the total variable costs by the quantity of output produced.

Short-Run Production

The period in which at least one input or factor of production is fixed, allowing firms to adjust only certain inputs to change output levels.

Average Total Cost

The total cost of production (fixed and variable costs) divided by the total quantity of output produced.