Refer to the information provided in Figure 14.7 below to answer the questions that follow.
Figure 14.7
-Refer to Figure 14.7.Suppose the economy is initially at Point A.A contractionary fiscal policy moves the economy to Point ________ in the short run.

Question

Refer to the information provided in Figure 14.7 below to answer the questions that follow.
  Figure 14.7
-Refer to Figure 14.7.Suppose the economy is initially at Point A.A contractionary fiscal policy moves the economy to Point ________ in the short run.

Quizplus · Accepted Answer

A contractionary fiscal policy reduces aggregate demand, shifting the AD curve to the left. This moves the economy from Point A to Point B in the short run.

Refer to the Information Provided in Figure 14