Figure 16-7
-Refer to Figure 16-7. If the economy is at point 4, boosting aggregate demand through
Expansionary policies will most likely lead to

Question

Figure 16-7 
-Refer to Figure 16-7. If the economy is at point 4, boosting aggregate demand through
Expansionary policies will most likely lead to

Quizplus · Accepted Answer

Point 4 is in a recessionary gap, indicating an output lower than potential. Expansionary policies would increase aggregate demand and shift the AD curve to the right, leading to a higher level of output and employment. Thus, the most likely outcome would be a recovery phase.

Figure 16-7 -Refer to Figure 16-7. If the Economy Is at Point