-Refer to the Above Figure

question 144

Multiple Choice

-Refer to the above figure. Suppose the economy is operating at point A. There is a recessionary gap of ________, which can be closed by ________.

• A) $3 trillion; increasing government spending by $1 trillion
• B) $1 trillion; expansionary fiscal policy that shifts the short-run aggregate supply curve through point C
• C) $2 trillion; expansionary fiscal policy that generates another $2 trillion in total spending
• D) $2 trillion; an increase in government spending of $14 trillion