Refer to the information provided in Figure 14.7 below to answer the questions that follow.
Figure 14.7
-Refer to Figure 14.7.Which combinations of events could move the economy from Point A to Point B,and then from Point B to Point E?

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.Which combinations of events could move the economy from Point A to Point B,and then from Point B to Point E?

Quizplus · Accepted Answer

A contractionary monetary policy would shift the AD curve leftward, moving the economy from Point A to Point B. However, a rightward shift in the AS curve would be necessary to then move the economy from Point B to Point E, indicating an increase in output and a decrease in price level. An expansionary fiscal policy (such as increased government spending or tax cuts) would shift the AD curve rightward, making it unlikely to result in an economy moving from Point A to Point B.

Refer to the Information Provided in Figure 14