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Figure 12-3 -Refer to Figure 12-3. If the Aggregate Demand Curve Is

Question 94

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Figure 12-3 Figure 12-3 -Refer to Figure 12-3. If the aggregate demand curve is AD<sub>1</sub>, which of the following is the most Appropriate discretionary fiscal policy to pursue? A) a contractionary fiscal policy involving reductions in government spending and increases in income tax rates B) a contractionary fiscal policy involving reductions in government spending and decreases in income tax rates C) an expansionary fiscal policy involving increases in government spending and increases in investment tax credits D) an expansionary fiscal policy involving increases in government spending and decreases in investment tax credits
-Refer to Figure 12-3. If the aggregate demand curve is AD1, which of the following is the most
Appropriate discretionary fiscal policy to pursue?


A) a contractionary fiscal policy involving reductions in government spending and increases in income tax rates
B) a contractionary fiscal policy involving reductions in government spending and decreases in income tax rates
C) an expansionary fiscal policy involving increases in government spending and increases in investment tax credits
D) an expansionary fiscal policy involving increases in government spending and decreases in investment tax credits

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