Figure 122 Alt Text for Figure 12

question 274

Multiple Choice

Figure 12.2 Alt text for Figure 12.2: In figure 12.2, a graph comparing real GDP and price level.
Long description for Figure 12.2: The x-axis is labelled, real GDP (trillions of 2007 dollars) and the y-axis is labelled, price level (CPI) .3 lines are shown; AD, LRAS, and SRAS.Line AD begins at the top left corner and slopes down to the end of the x-axis.Line SRAS begins near the bottom left corner and slopes up to the top right corner.Line LRAS is perpendicular to the x-axis, and intersects lines AD and SRAS at point A.
-Refer to Figure 12.2.In the graph above, if the economy is at point A, an appropriate fiscal policy by the federal government would be to

• A)lower the discount rate of interest.
• B)execute an open market sale of government securities.
• C)increase government transfer payments.
• D)increase marginal income tax rates.
• E)decrease government spending.

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