Figure 18-6

-Refer to Figure 18-6.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,Congress and the president would most likely pursue

Question

Figure 18-6
 
-Refer to Figure 18-6.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,Congress and the president would most likely pursue

Quizplus · Accepted Answer

If the economy is moving from point A to point B, it suggests that the economy is overheating or experiencing inflationary pressures. To counteract this, contractionary fiscal policy would be used to reduce aggregate demand and stabilize prices.

Figure 18-6 -Refer to Figure 18-6.In the Dynamic Model of AD-AS in Model