In Panel (b)of Exhibit 16-2, an expansionary stabilization policy designed to move the economy from Y₁ to Y_p would attempt to shift: A)the aggregate demand curve (AD)leftward. B)SRAS₁ to SRAS₂. C)the aggregate demand curve (AD)rightward. D)the LRAS rightward.

Question

Quizplus · Accepted Answer

An expansionary stabilization policy aims to increase aggregate demand, thereby shifting the aggregate demand curve (AD) rightward to move the economy from a lower output level (Y1) to the potential output level (Yp).

In Panel (B)of Exhibit 16-2, an Expansionary Stabilization Policy Designed