Figure 11.1 shows the relationship between the price level and the real GDP.If the government wants the economy to be at full employment,it should _____.

A)increase taxes
B)decrease transfer payments
C)decrease government purchases
D)wait for the SRAS curve to shift to the left
E)increase its purchases

Question

Figure 11.1 shows the relationship between the price level and the real GDP.If the government wants the economy to be at full employment,it should _____.

A)increase taxes 
B)decrease transfer payments 
C)decrease government purchases 
D)wait for the SRAS curve to shift to the left 
E)increase its purchases

Quizplus · Accepted Answer

Increasing government purchases will shift the aggregate demand (AD) curve to the right, leading to an increase in real GDP and potentially reaching full employment.

Figure 111 Shows the Relationship Between the Price Level and the the Real