Use the figure below to answer the following questions.

Figure 26.3.3
-Refer to Figure 26.3.3(a). You might expect the government to
A)do nothing except maintain the current equilibrium.
B)cut government expenditure.
C)increase government expenditure.
D)pursue trade policies that reduce exports.
E)raise taxes.

Question

Use the figure below to answer the following questions.
  
Figure 26.3.3
-Refer to Figure 26.3.3(a). You might expect the government to
A)do nothing except maintain the current equilibrium. 
B)cut government expenditure. 
C)increase government expenditure. 
D)pursue trade policies that reduce exports. 
E)raise taxes.

Quizplus · Accepted Answer

Increasing government expenditure is a common fiscal policy tool used by governments to stimulate economic activity, especially if the economy is underperforming or in a recession.

Use the Figure Below to Answer the Following Questions