Figure 7-2 -In the Figure Above, the Shifts F0 to F1 and to F1

question 90

Multiple Choice

Figure 7-2
-In the figure above, the shifts F0 to F1 and N0d to N1d may have occurred in an economy subjected to a

• A) permanent fiscal deficit.
• B) temporary fiscal deficit.
• C) permanent increase in the relative price of energy.
• D) permanent increase in the rate of growth of the money supply.

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Definitions:

Supply-Side Economics

An economic theory that advocates for lower taxes and deregulation to stimulate production and economic growth.

Marginal Income Tax Rates

The percentage of tax applied to your income for each tax bracket in which you qualify, reflecting the amount of tax that is paid on an additional dollar of income.

Open-Market Operations

The purchase or sale of Treasury securities by the Federal Reserve; main monetary policy weapon.

Theories Of Expectations

Various economic theories that attempt to predict how rational individuals form their expectations about future events, affecting their economic decisions.