Given AD₁ and AS₁ in Figure 8.3,the Keynesian approach to achieving a higher level of output would be to A)Impose price controls. B)Increase the growth of the money supply to shift AS₁ to AS₂ C)Do nothing. D)Employ an expansionary fiscal policy.

Question

Quizplus · Accepted Answer

The Keynesian approach to achieving a higher level of output is through an expansionary fiscal policy, which involves increasing government spending or reducing taxes to stimulate aggregate demand and shift the aggregate demand curve to the right, leading to a higher level of output. Choices A, B, and C are not effective approaches for achieving a higher level of output in the Keynesian framework. Price controls may lead to shortages or surpluses and do not address the underlying issue of low aggregate demand. Increasing the money supply may lead to inflation and does not address the underlying issue of low aggregate demand. Doing nothing may lead to a persistent recession or depression.

Given AD1 and AS1 in Figure 8

Given AD₁ and AS₁ in Figure 8