Figure 27-5

-Refer to Figure 27-5.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 27-5
 
-Refer to Figure 27-5.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 AD curve to the right, which would lead to an increase in real GDP and a higher price level. This would move the economy from point B to point C. Decreasing government purchases, increasing income taxes, or selling Treasury bills would shift the AD curve to the left and move the economy further away from point C.

Figure 27-5 -Refer to Figure 27-5.In the Graph Above,suppose the Economy in Above,suppose