Use the Following to Answer Questions

Use the following to answer questions .
Exhibit: Fiscal Policy Options
-(Exhibit: Fiscal Policy Options) 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