Figure 16-8
-Refer to Figure 16-8.In the graph above,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the Congress and the president use to move the economy to point C?

Question

Figure 16-8 
-Refer to Figure 16-8.In the graph above,suppose the economy in Year 1 is at point A and expected in Year 2 to be at point B.Which of the following policies could the 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, expansionary fiscal policy is required, which involves increasing government purchases. This will cause an increase in aggregate demand and shift the economy to the right towards point C. Decreasing government purchases (B) would have the opposite effect and cause the economy to move to the left towards point A. Increasing income taxes (C) would reduce disposable income and decrease aggregate demand, leading to a leftward shift in the economy. Selling Treasury bills (D) would not directly impact aggregate demand or the position of the economy on the graph.

Figure 16-8 -Refer to Figure 16-8.In the Graph Above,suppose the Economy in the Economy