Refer to the diagram. Discretionary ?scal policy designed to expand GDP is illustrated by
A) the shift of curve $T _ { 1 } \text { to } T _ { 2 }$
B) the shift of curve $T _ { 2 } \text { to } T _ { 1 }$
C) a movement from a to c along curve $T _ { 2 }$
D) a movement from d to b along curve $T _ { 1 } .$

Question

Refer to the diagram. Discretionary ?scal policy designed to expand GDP is illustrated by
A) the shift of curve $T _ { 1 } \text { to } T _ { 2 }$ 
B) the shift of curve $T _ { 2 } \text { to } T _ { 1 }$ 
C) a movement from a to c along curve $T _ { 2 }$ 
D) a movement from d to b along curve $T _ { 1 } .$

Quizplus · Accepted Answer

The shift of curve $T _ { 1 } \text { to } T _ { 2 }$ represents an increase in government spending or a decrease in taxes, both of which would increase aggregate demand and shift the AD curve to the right, resulting in an expansion of GDP. This is an example of discretionary fiscal policy, where the government takes deliberate action to affect the economy.

Refer to the Diagram T1 to T2T _ { 1 } \text { to } T _ { 2 }T1​ to T2​

Refer to the Diagram $T _ { 1 } \text { to } T _ { 2 }$