Figure 27-3

-Refer to Figure 27-3.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
A) expansionary fiscal policy.
B) contractionary fiscal policy.
C) expansionary monetary policy.
D) contractionary monetary policy.
E) expansionary automatic stabilizers.

Question

Figure 27-3
 
-Refer to Figure 27-3.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
A) expansionary fiscal policy. 
B) contractionary fiscal policy. 
C) expansionary monetary policy. 
D) contractionary monetary policy. 
E) expansionary automatic stabilizers.

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, Congress and the president would likely pursue contractionary fiscal policy to reduce aggregate demand and stabilize prices.

Figure 27-3 -Refer to Figure 27-3.In the Dynamic Model of AD-AS in Model