Figure 16-3
-Refer to Figure 16-3.In the graph above,suppose the economy is initially at point A.The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by Congress and the president?
A)a decrease in income taxes
B)a decrease in interest rates
C)a decrease in government purchases
D)an increase in the money supply

Question

Figure 16-3 
-Refer to Figure 16-3.In the graph above,suppose the economy is initially at point A.The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by Congress and the president?
A)a decrease in income taxes 
B)a decrease in interest rates 
C)a decrease in government purchases 
D)an increase in the money supply

Quizplus · Accepted Answer

A decrease in income taxes would increase disposable income, leading to higher consumption and aggregate demand, shifting the economy from point A to point B.

Figure 16-3 -Refer to Figure 16-3.In the Graph Above,suppose the Economy Is