Figure 18-8

-Refer to Figure 18-8.In the graph above,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the Congress and the president use to move the economy to point C?

Question

Figure 18-8
 
-Refer to Figure 18-8.In the graph above,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the Congress and the president use to move the economy to point C?

Quizplus · Accepted Answer

Increasing government purchases would shift the aggregate demand curve to the right, causing output and price levels to increase, ultimately moving the economy from point B to point C. Decreasing government purchases, increasing income taxes, or selling Treasury bills would all shrink aggregate demand, causing the economy to move further away from point C.

Figure 18-8 -Refer to Figure 18-8.In the Graph Above,suppose the Economy in Above,suppose