FIGURE 24-2 -Refer to Figure 24-2. Suppose the Economy Is in a in a Short-Run

question 6

Multiple Choice

FIGURE 24-2
-Refer to Figure 24-2. Suppose the economy is in a short-run equilibrium at Y1. An appropriate fiscal policy for closing the output gap is

• A) a decrease in personal income taxes.
• B) a decrease in government purchases.
• C) an increase in current interest rates.
• D) an increase in government purchases.
• E) a decrease in corporate income-tax rates.