Refer to the diagram, in which Q f is the full-employment output. If aggregate demand curve AD 2 describes the current situation, appropriate fiscal policy would be to:
A. do nothing since the economy appears to be achieving full-employment real output.
B. increase taxes and reduce government spending to shift the aggregate demand curve
rightward from AD 2 to AD 3 .
C. increase taxes on businesses to shift the aggregate supply curve rightward to reduce the
price level.
D. reduce taxes and increase government spending to shift the aggregate demand curve from
AD 2 to AD 1
A. do nothing since the economy appears to be achieving full-employment real output.
You might also like to view...
Total surplus in a market does not change when the government imposes a tax on that market because the loss of consumer surplus and producer surplus is equal to the gain of government revenue
a. True b. False Indicate whether the statement is true or false
Foreign direct investment generally leads to technological advancements in poorer countries.
Answer the following statement true (T) or false (F)