(Figure: Fiscal Policy Choices) Use Figure: Fiscal Policy Choices. If the government uses discretionary fiscal policy in the economy depicted in panel (b) when real GDP is Y1, government spending is likely to be _____, and taxes are likely to be _____.
A) reduced; cut
B) reduced; cut.
C) increased; increased
D) increased; increased.
E) reduced; increased
F) reduced; increased.
G) increased; cut.
H) increased; cut
Correct Answer:
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