Refer to the information provided in Figure 13.7 below to answer the questions that follow. Figure 13.7
-Refer to Figure 13.7. 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 13.7 below to answer the questions that follow.  Figure 13.7
-Refer to Figure 13.7. Suppose the economy is initially at Point A. A contractionary fiscal policy moves the economy to Point ________ in the short run.

Quizplus · Accepted Answer

Contractionary fiscal policy, which involves reducing government spending or increasing taxes, would decrease aggregate demand. This would move the economy up along the aggregate supply curve from Point A to Point B, resulting in lower output and higher prices in the short run.

Refer to the Information Provided in Figure 13