​ ​ Exhibit 16A-2 Macro AD/AS Models

question 106

Multiple Choice

​ ​ Exhibit 16A-2 Macro AD/AS Models
​

​ In Panel (a) of Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y₁ and price level P₂. If the federal government or Fed decides to intervene, it would most likely:

• A) ​increase taxes.
• B) ​decrease the money supply.
• C) ​increase the level of government spending for goods and services.
• D) ​decrease the level of government spending for goods and services.