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-Refer to the Above Diagram

Question 3

Multiple Choice

-Refer to the above diagram. The economy is at equilibrium at point A. What fiscal policy would be most appropriate to control demand-pull inflation? A) Decrease aggregate demand by increasing taxes. B) Increase aggregate demand by decreasing taxes. C) Decrease aggregate supply by increasing taxes. D) Increase aggregate demand by increasing government spending.
-Refer to the above diagram. The economy is at equilibrium at point A. What fiscal policy would be most appropriate to control demand-pull inflation?


A) Decrease aggregate demand by increasing taxes.
B) Increase aggregate demand by decreasing taxes.
C) Decrease aggregate supply by increasing taxes.
D) Increase aggregate demand by increasing government spending.

Correct Answer:

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