Figure 15-2
-Refer to the Figure 15-2.In a closed economy,what could have caused the economy to move from a to b?
A) a wave of optimism
B) a decrease in price
C) either fiscal or monetary contraction
D) an increase in the price of oil

Question

Figure 15-2 
-Refer to the Figure 15-2.In a closed economy,what could have caused the economy to move from a to b?
A) a wave of optimism 
B) a decrease in price 
C) either fiscal or monetary contraction 
D) an increase in the price of oil

Quizplus · Accepted Answer

The movement from point A to point B indicates a decrease in output and an increase in the unemployment rate, which can be caused by either fiscal or monetary contraction. Fiscal contraction refers to a decrease in government spending or an increase in taxes, while monetary contraction refers to a decrease in the money supply or an increase in interest rates. Both of these policies aim to reduce inflationary pressures in the economy by reducing aggregate demand. Therefore, Choice C is the best answer.

Figure 15-2 -Refer to the Figure 15-2.In a Closed Economy,what Could Have