(Figure: Short- and Long-Run Equilibrium II) Use Figure: Short- and Long-Run Equilibrium II. If the economy is short-run macroeconomic equilibrium at E1, an appropriate policy to return the economy to potential output would be a(n) :
A) increase in government spending
B) increase in government spending.
C) decrease in government spending
D) decrease in government spending.
E) increase in transfer payments.
F) increase in transfer payments
G) decrease in taxes
H) decrease in taxes.
Correct Answer:
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