Diagram 1 Price Level 0 ADO AD₁ g g Q₁ Real GDP A. ADO. B. ADI. C. AD2. D. AD3 AS 11. Refer to Diagram 1, in which Q is the full-employment output. A contractionary fiscal policy would be most appropriate if the economy's present aggregate demand curve were at: 12. Refer to Diagram 1, in which Qf is the full-employment output. An expansionary fiscal policy would be most appropriate if the economy's present aggregate demand curve were at: A. ADO. B. AS. C. AD2. D. AD3. 13. Refer to Diagram 1, in which Qr is the full-employment output. If the economy's current aggregate demand curve is AD1, it would be appropriate for the government to: A. reduce government expenditures and taxes by equal-size amounts. B. reduce government expenditures or increase taxes. C. increase government expenditures or reduce taxes. D. reduce unemployment compensation benefits.

Diagram 1 Price Level 0 ADO AD₁ g g Q₁ Real GDP A. ADO. B. ADI. C. AD2. D. AD3 AS 11. Refer to Diagram 1, in which Q is the full-employment output. A contractionary fiscal policy would be most appropriate if the economy's present aggregate demand curve were at: 12. Refer to Diagram 1, in which Qf is the full-employment output. An expansionary fiscal policy would be most appropriate if the economy's present aggregate demand curve were at: A. ADO. B. AS. C. AD2. D. AD3. 13. Refer to Diagram 1, in which Qr is the full-employment output. If the economy's current aggregate demand curve is AD1, it would be appropriate for the government to: A. reduce government expenditures and taxes by equal-size amounts. B. reduce government expenditures or increase taxes. C. increase government expenditures or reduce taxes. D. reduce unemployment compensation benefits.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter16: Expectations Theory And The Economy

Section: Chapter Questions

Problem 10QP

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