-Refer to the above figure. Suppose the economy is at point A. By the proper use of fiscal policy, the government can
A)boost taxes to shift LRAS through point A.
B)increase government spending to get the economy to point B.
C)raise income tax rates to get the economy to point C.
D)reduce government spending to get the economy to point D.

Question

-Refer to the above figure. Suppose the economy is at point A. By the proper use of fiscal policy, the government can
A)boost taxes to shift LRAS through point A. 
B)increase government spending to get the economy to point B. 
C)raise income tax rates to get the economy to point C. 
D)reduce government spending to get the economy to point D.

Quizplus · Accepted Answer

Increasing government spending is an expansionary fiscal policy that can shift the aggregate demand curve to the right, moving the economy from point A to point B.

-Refer to the Above Figure