Homework Answers
Answer
Option 2
increase in taxes
SRAS=AD is at the right of the LRAS so there is an inflationary gap
and it can be closed with a decrease in demand by an increase in
taxes which decreases AD and shifts AD to the left.
The increase in government spending and a decrease in reserve
requirements increase AD and increases the gap even more.
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Based on the equilibrium in the graph of the macroeconomy below, which of the following would...
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Questions
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Based on the graph below, what would be the appropriate fiscal policy action at point X? RGDP X time increase taxes buy government securities decrease government spending decrease interest rates
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- decreases
- returns to its initial value
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