-Refer to the Above Figure

question 273

Multiple Choice

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

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

---

Definitions:

Closed-end Investment

An investment fund that has a fixed number of shares outstanding, typically traded on a stock exchange, unlike open-end funds that can issue unlimited shares.

NAV

Net Asset Value, the per-share value of a mutual fund or exchange-traded fund, calculated by dividing the total value of all the securities in the portfolio by the number of shares outstanding.

Premium/Discount

Refers to the amount by which the market price of a bond exceeds (premium) or is less than (discount) its face value.

Front-end Load

A sales charge or commission paid by an investor at the initial purchase of mutual fund shares, usually used to compensate brokers or sales agents.