The figure given below shows the macroeconomic equilibria of a country.?Figure 11.1

-Refer to Figure 11.1. A decrease in government spending would be most effective in reducing the price level if:
A) the economy were in equilibrium at point A.
B) the economy were in equilibrium at point B.
C) there is a rightward shift in the aggregate supply curve.
D) the economy were in equilibrium at point C.
E) there is a leftward shift in the aggregate supply curve.

Question

The figure given below shows the macroeconomic equilibria of a country.?Figure 11.1
 
-Refer to Figure 11.1. A decrease in government spending would be most effective in reducing the price level if:
A) the economy were in equilibrium at point A. 
B) the economy were in equilibrium at point B. 
C) there is a rightward shift in the aggregate supply curve. 
D) the economy were in equilibrium at point C. 
E) there is a leftward shift in the aggregate supply curve.

Quizplus · Accepted Answer

The Answer of The figure given below shows the macroeconomic equilibria of a country.?Figure 11.1
 
-Refer to Figure 11.1. A decrease in government spending would be most effective in reducing the price level if:
A) the economy were in equilibrium at point A. 
B) the economy were in equilibrium at point B. 
C) there is a rightward shift in the aggregate supply curve. 
D) the economy were in equilibrium at point C. 
E) there is a leftward shift in the aggregate supply curve.

The Figure Given Below Shows the Macroeconomic Equilibria of a Country.?Figure