Figure 26-6
-Refer to Figure 26-6. In the figure above, if the economy is at point A, the appropriate monetary policy by the Federal Reserve would be to
A) lower interest rates.
B) raise interest rates.
C) lower income taxes.
D) raise income taxes.

Question

Figure 26-6 
-Refer to Figure 26-6. In the figure above, if the economy is at point A, the appropriate monetary policy by the Federal Reserve would be to
A) lower interest rates. 
B) raise interest rates. 
C) lower income taxes. 
D) raise income taxes.

Quizplus · Accepted Answer

If the economy is at point A, it likely indicates a recessionary gap where output is below potential. Lowering interest rates would stimulate investment and consumption, helping to increase aggregate demand and move the economy towards full employment.

Figure 26-6 -Refer to Figure 26-6. in the Figure Above, If the Above