Figure 18-8

-Refer to Figure 18-8.In the graph above,suppose the economy in Year 1 is at point A and is expected in Year 2 to be at point B.Which of the following policies could Congress and the president use to move the economy to point C?

Question

Figure 18-8
 
-Refer to Figure 18-8.In the graph above,suppose the economy in Year 1 is at point A and is expected in Year 2 to be at point B.Which of the following policies could Congress and the president use to move the economy to point C?

Quizplus · Accepted Answer

To move the economy from point B to point C, Congress and the president could use expansionary fiscal policy, which involves increasing government purchases. This would shift the AD curve to the right, leading to an increase in output (real GDP) and employment. Decreasing government purchases (B), increasing income taxes (C), and selling Treasury bills (D) would all have contractionary effects on the economy, shifting the AD curve to the left and decreasing output and employment.

Figure 18-8 -Refer to Figure 18-8.In the Graph Above,suppose the Economy in Above,suppose