Figure 27-2

-Refer to Figure 27-2.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
A) decrease government spending.
B) increase government spending.
C) increase oil prices.
D) increase taxes.
E) lower interest rates.

Question

Figure 27-2
 
-Refer to Figure 27-2.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
A) decrease government spending. 
B) increase government spending. 
C) increase oil prices. 
D) increase taxes. 
E) lower interest rates.

Quizplus · Accepted Answer

Moving from point A to point B would represent an increase in output and a decrease in unemployment. This can be achieved by increasing government spending, which shifts the AD curve to the right. Therefore, Congress and the president would most likely choose to increase government spending. The other options would not result in the desired outcome of increasing output and decreasing unemployment.

Figure 27-2 -Refer to Figure 27-2.In the Dynamic Model of AD-AS in Model