Figure 11-2

-Which graph in Figure 11-2 best reflects a Keynesian view of the impact of a $500-per-person tax cut?
A)1
B)2
C)3

Question

Figure 11-2
​ 
-Which graph in Figure 11-2 best reflects a Keynesian view of the impact of a $500-per-person tax cut?
A)1 
B)2 
C)3

Quizplus · Accepted Answer

The Keynesian view emphasizes the impact of fiscal policy on aggregate demand. A $500-per-person tax cut would increase disposable income, leading to higher consumer spending. This would shift the aggregate demand curve to the right, as depicted in graph 2, which shows an increase in both the price level and output, consistent with Keynesian economics.

Figure 11-2 ​

Figure 11-2