Figure 15-6
-Refer to Figure 15-6.In the figure above,if the economy is at point A,the appropriate monetary policy by the Federal Reserve would be to
A)lower interest rates.
B)raise interest rates.
C)lower income taxes.
D)raise income taxes.

Question

Figure 15-6 
-Refer to Figure 15-6.In the figure above,if the economy is at point A,the appropriate monetary policy by the Federal Reserve would be to
A)lower interest rates. 
B)raise interest rates. 
C)lower income taxes. 
D)raise income taxes.

Quizplus · Accepted Answer

At point A, the economy is below its potential output, indicating a recessionary gap. Lowering interest rates would stimulate borrowing and spending, helping to move the economy towards its potential output.

Figure 15-6 -Refer to Figure 15-6.In the Figure Above,if the Economy Is