Figure 27-5
-Refer to Figure 27-5. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely
A) decrease government spending.
B) increase government spending.
C) increase oil prices.
D) increase taxes.
E) lower interest rates.

Question

Figure 27-5 
-Refer to Figure 27-5. In the dynamic model of AD-AS in the figure above, if the economy is at point A in year 1 and is expected to go to point B in year 2, Congress and the president would most likely
A) decrease government spending. 
B) increase government spending. 
C) increase oil prices. 
D) increase taxes. 
E) lower interest rates.

Quizplus · Accepted Answer

To move from point A to point B, which likely represents an increase in aggregate demand, Congress and the president would most likely increase government spending to stimulate the economy.

Figure 27-5 -Refer to Figure 27-5. in the Dynamic Model of AD-AS