An economy is at a short-run equilibrium as illustrated in the above figure.An appropriate fiscal policy option to move the economy to full employment is to
A) increase tax rates and move the economy to a full-employment equilibrium at point b.
B) increase tax rates and move the economy to a full-employment equilibrium at point c.
C) increase government expenditure and move the economy to a full-employment equilibrium at point c.
D) increase government expenditure and move the economy to a full-employment equilibrium at point b.
E) lower the interest rate by increasing the quantity of money and move the economy to a full-employment equilibrium at point b.
Correct Answer:
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