Figure: Aggregate Demand and Fiscal Policy Refer to the Figure

question 117

Multiple Choice

Figure: Aggregate Demand and Fiscal Policy Refer to the figure. Assume the government of an economy in recession at point Y in the diagram is aware of the expenditure multiplier when it formulates policy decisions. If it chooses to increase government spending growth by 4percentage points, it should expect the economy to:

• A) move at least to point W.
• B) move at least to point X.
• C) move at least to point Z.
• D) stay at point Y.