Exhibit 17-1 -According to Those Who Favor an Active Approach to Policy

question 39

Multiple Choice

Exhibit 17-1
-According to those who favor an active approach to policy, how can the economy shown in Exhibit 17-1 attain equilibrium at potential output?

• A)The SRAS curve will shift to the left.
• B)The SRAS curve will shift to the right.
• C)The Fed or the government should act to shift the aggregate demand curve to the right.
• D)Either the money supply or government spending should be decreased.
• E)Aggregate demand should be decreased.

---

Definitions:

Progressives

Reformers in the late 19th and early 20th centuries who sought to address social problems caused by industrialization and urbanization, advocating for social justice and government involvement.

Moral Purity

A social movement, especially prominent in the 19th and early 20th centuries, aimed at maintaining or restoring the moral integrity of society through abstention and the prohibition of behaviors deemed immoral.

State Intervention

The involvement of a government in regulating or participating in economic, social, or other public sectors, often aimed at achieving policy objectives or correcting market failures.

New Nationalism

A political philosophy introduced by Theodore Roosevelt in 1910 advocating for government intervention to enhance public welfare and regulate big businesses.