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In Figure 8

Question 108

Multiple Choice

In Figure 8.5,if this economy's inflation goal is a price level of P<sub>2</sub> but the equilibrium price level is P<sub>3</sub>,one way to accomplish this using fiscal policy would be to A) Decrease AD by decreasing income taxes. B) Decrease AS by decreasing the money supply. C) Decrease AD by reducing transfer payments. D) Increase AS by reducing government regulations. In Figure 8.5,if this economy's inflation goal is a price level of P2 but the equilibrium price level is P3,one way to accomplish this using fiscal policy would be to


A) Decrease AD by decreasing income taxes.
B) Decrease AS by decreasing the money supply.
C) Decrease AD by reducing transfer payments.
D) Increase AS by reducing government regulations.

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