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question 145

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Use the following to answer questions:
Figure: Policy Alternatives Use the following to answer questions: Figure: Policy Alternatives   -(Figure: Policy Alternatives)  Refer to Figure: Policy Alternatives. In panel (b) , the economy is initially in short-run equilibrium at real GDP level Y<sub>1</sub> and price level P<sub>2</sub>. If the government decides to intervene, it will MOST likely: A)  increase taxes. B)  decrease the quantity of money. C)  increase its spending. D)  decrease its spending.
-(Figure: Policy Alternatives) Refer to Figure: Policy Alternatives. In panel (b) , the economy is initially in short-run equilibrium at real GDP level Y1 and price level P2. If the government decides to intervene, it will MOST likely:


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