Use the Following to Answer Questions

question 22

Multiple Choice

Use the following to answer questions .
Exhibit: Aggregate Demand and Aggregate Supply at Different Price Levels

-(Exhibit: Aggregate Demand and Aggregate Supply at Different Price Levels) The table shows the aggregate demand and short-run aggregate supply curves for an economy. The potential level of output is $7.6 trillion. If policymakers choose to close the gap by using stabilization policy, they should use

• A) contractionary fiscal or monetary policies.
• B) expansionary fiscal or monetary policies.
• C) a combination of contractionary fiscal and expansionary monetary policies.
• D) a combination of expansionary fiscal and contractionary monetary policies.

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