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

question 69

Multiple Choice

Figure: Aggregate Demand and Fiscal Policy (Figure: Aggregate Demand and Fiscal Policy) In the best case scenario, effective short-run fiscal policy would take which action to correct an economy in recession at Point Z?

• A) increase aggregate demand, returning the economy to Point X.
• B) increase the Solow growth curve to a level above 3 percent.
• C) decrease the Solow growth curve to a level below 2 percent.
• D) increase aggregate demand to move the economy to Point W.

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