When the Current Short-Run Equilibrium Is to the Right of the Long-Run

question 211

Multiple Choice

When the current short-run equilibrium is to the right of the long-run aggregate supply, appropriate discretionary fiscal policy used to address this problem would be to

• A) increase taxes.
• B) decrease taxes.
• C) increase government spending.
• D) decrease the discount rate.

---

Definitions:

Dependent Variables

Variables in an experiment or model whose values are expected to change as a result of changes in other variables.

Indicators

Variables or metrics used to assess a specific aspect or condition within a study or analysis.

Durbin-Watson Statistic

A test statistic used to detect the presence of autocorrelation at lag 1 in the residuals from a regression analysis.

Multicollinearity

A statistical phenomenon in which two or more predictor variables in a multiple regression model are highly correlated, making it difficult to distinguish their individual effects.