Figure 27-3
-Refer to Figure 27-3. 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 27-3 
-Refer to Figure 27-3. 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 consumer spending and shifting the aggregate demand curve to the right, moving the economy from point A to point B.

Figure 27-3 -Refer to Figure 27-3. in the Graph Above, Suppose the Above