Exhibit 15-3

-Refer to the graph in the exhibit.Suppose the economy started near point b, and government purchases increased.Toward what point would the economy be expected to move in the short run?.toward point a
A) Refer to the graph in the exhibit. Suppose the economy started near point b, and government purchases increased. Toward what point would the economy be expected to move in the short run? . toward point a
B) toward point c
C) toward point d
D) toward point e

Question

Exhibit 15-3
 
-Refer to the graph in the exhibit.Suppose the economy started near point b, and government purchases increased.Toward what point would the economy be expected to move in the short run?.toward point a  
A) Refer to the graph in the exhibit. Suppose the economy started near point b, and government purchases increased. Toward what point would the economy be expected to move in the short run? . toward point a 
B) toward point c 
C) toward point d 
D) toward point e

Quizplus · Accepted Answer

An increase in government purchases would boost aggregate demand, moving the economy from a point of lower output and higher unemployment (near point b) to a point of higher output and lower unemployment (toward point c) in the short run. This is consistent with Keynesian economic theory, which suggests that government spending can stimulate economic activity.

Exhibit 15-3 -Refer to the Graph in the Exhibit.Suppose the Economy Started