Q 41

Use the following to answer questions: img -(Figure: Short- and Long-Run Equilibrium II) Refer to Figure: Short- and Long-Run Equilibrium II. If the economy is at equilibrium at E1, the appropriate policy to return the economy to potential output would be a(n): A) increase in government spending. B) decrease in government spending. C) increase in transfer payments. D) decrease in taxes.

Multiple Choice