The Diagram Below Shows Two Budget Deficit Functions for a Hypothetical

question 78

Multiple Choice

The diagram below shows two budget deficit functions for a hypothetical economy. FIGURE 31-2
-Refer to Figure 31-2.Initially,suppose real GDP is $100 million and the budget deficit is $14 million,as shown by point A.Which of the following events could result in a move from point A to point B?

• A)the implementation of an expansionary fiscal policy
• B)the implementation of a contractionary fiscal policy
• C)the implementation of an expansionary monetary policy
• D)the implementation of a contractionary monetary policy
• E)the economy entering into a boom

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