Figure 33-8

-In Figure 33-8, which of the following movements reflects the closing of a recessionary gap with an expansionary monetary and fiscal policy?
A)C to B
B)D to C
C)C to E
D)D to E

Question

Figure 33-8
​ 
-In Figure 33-8, which of the following movements reflects the closing of a recessionary gap with an expansionary monetary and fiscal policy?
A)C to B 
B)D to C 
C)C to E 
D)D to E

Quizplus · Accepted Answer

The movement from point D to point C reflects the closing of a recessionary gap with an expansionary monetary and fiscal policy. This is because there is an increase in both the money supply and government spending (represented by the shift from MS1 to MS2 and from AD1 to AD2) which leads to an increase in output (from Y1 to Y2) and a decrease in unemployment (from U1 to U2).

Figure 33-8 ​

Figure 33-8