When the economy enters a recessionary phase of the business cycle, unemployment tends to

If the government saved during an economic boom by increasing taxes or decreasing spending, this would be:

A. contractionary fiscal policy. B. expansionary monetary policy. C. expansionary fiscal policy. D. contractionary monetary policy.

Refer to Figure 16-9. Given that the economy has moved from point A to point B in the graph above, which of the following would be the appropriate fiscal policy to achieve potential GDP?

A) decrease the money supply B) increase interest rates C) increase government spending D) increase taxes