Refer to Figure 18.1 for the following questions. Figure 18.1 -In Figure 18.1,if fiscal policy successfully moves the economy from point B to equilibrium at potential GDP,this will _______. A) increase the price level from P₂ to P₃ B) increase the price level from P₁ to P₂ C) decrease the price level from P₃ to P₂ D) decrease the price level from P₂ to P₁

Question

Quizplus · Accepted Answer

If fiscal policy moves the economy from point B to equilibrium at potential GDP, it typically involves increasing aggregate demand, which would increase the price level from P2 to P3.

Refer to Figure 18.1 for the Following Questions