Use the following to answer questions: -(Figure: Fiscal Policy Choices) Refer to Figure: Fiscal Policy Choices. It would be appropriate to use contractionary fiscal policy to shift aggregate demand in _____ from _____. A) panel (b); AD₁ to AD₂ B) panel (a); AD₂ to AD₁ C) panel (a); AD₁ to AD₂ D) panel (b); AD₂ to AD₁

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Contractionary fiscal policy reduces aggregate demand, shifting it to the left. In panel (b), AD1 is to the right of AD2, so shifting from AD1 to AD2 would be contractionary.

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