(Figure: Aggregate Demand and Fiscal Policy) Figure: Aggregate Demand and Fiscal

question 44

Multiple Choice

(Figure: Aggregate Demand and Fiscal Policy) Figure: Aggregate Demand and Fiscal Policy Assume that 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 expenditures by 4 percent, it should expect

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

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