The following question are based on the following diagram:

-Which of the following events would correct the condition shown?
A) an increase in wages and other input prices
B) a decrease in the money supply by the government
C) a reduction in private sector spending
D) a shift to the left of aggregate demand
E) an increase in government spending coupled with a tax cut

Question

The following question are based on the following diagram:
 
-Which of the following events would correct the condition shown?
A) an increase in wages and other input prices 
B) a decrease in the money supply by the government 
C) a reduction in private sector spending 
D) a shift to the left of aggregate demand 
E) an increase in government spending coupled with a tax cut

Quizplus · Accepted Answer

An increase in government spending coupled with a tax cut would stimulate aggregate demand, potentially correcting an economic condition such as a recession or demand shortfall.

The Following Question Are Based on the Following Diagram