Fiscal Policy Actions That Are Intended to Have Long-Run Effects

question 297

Multiple Choice

Fiscal policy actions that are intended to have long-run effects on real GDP attempt to increase ________ through changing ________.

• A)aggregate demand; government spending
• B)aggregate supply; taxes
• C)aggregate demand; taxes
• D)aggregate supply; government spending

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Definitions:

Capital Goods Industries

Capital goods industries are sectors of the economy that produce machinery, equipment, and supplies used in the manufacturing and production of other goods rather than for direct consumption.

Business Cycle

The fluctuations in economic activity that an economy experiences over a period, ranging from expansions (growth) to recessions (contractions).

Industrial Equipment

This category involves machinery and tools used in manufacturing processes, ranging from small tools to large machinery for heavy industries, playing a crucial role in industrial operations.

Recession

A period of temporary economic decline during which trade and industrial activity are reduced, typically identified by a fall in GDP in two successive quarters.