-Refer to the Above Figure

question 242

Multiple Choice

-Refer to the above figure. Suppose the relevant aggregate demand curve is AD2. If the government wants to use discretionary fiscal policy to close the existing gap, it should

• A) decrease taxes.
• B) increase taxes.
• C) increase the money supply.
• D) decrease government spending.

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Definitions:

Total Debits

The sum of all debit entries recorded in the accounting ledger, reflecting assets or expenses that have increased.

Total Credits

The sum of all credit entries recorded in a financial account, representing increases in assets or decreases in liabilities.

Balance Sheet Columns

The sections in a balance sheet that categorize assets, liabilities, and equity accounts to display the financial position of a business at a certain point in time.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts, thereby preparing the accounts for the next accounting period.