Exhibit 20A-2 Macro AD/AS Models

question 12

Multiple Choice

Exhibit 20A-2 Macro AD/AS Models

-In Panel (b) of Exhibit 20A-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) decrease taxes.
• B) increase 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.