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Figure: Aggregate Demand and Fiscal Policy
-(Figure: Aggregate Demand and Fiscal Policy)Refer to the figure.In the best case scenario,effective fiscal policy would take which action to correct an economy in recession at point Z?
A) increase aggregate demand to move the economy to point X
B) increase the LRAS curve to a level above 3%
C) decrease the LRAS curve to a level below 2%
D) increase aggregate demand to move the economy to point W

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Figure: Aggregate Demand and Fiscal Policy 
-(Figure: Aggregate Demand and Fiscal Policy)Refer to the figure.In the best case scenario,effective fiscal policy would take which action to correct an economy in recession at point Z?
A) increase aggregate demand to move the economy to point X 
B) increase the LRAS curve to a level above 3% 
C) decrease the LRAS curve to a level below 2% 
D) increase aggregate demand to move the economy to point W

Quizplus · Accepted Answer

To correct an economy in recession at point Z, effective fiscal policy would aim to increase aggregate demand, moving the economy towards full employment at point X. This action stimulates economic activity and reduces unemployment.

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