Figure 16-6
-Refer to Figure 16-6.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,Congress and the president would most likely pursue
A)expansionary fiscal policy.
B)contractionary fiscal policy.
C)expansionary monetary policy.
D)contractionary monetary policy.
E)expansionary automatic stabilizers.

Question

Figure 16-6 
-Refer to Figure 16-6.In the dynamic model of AD-AS in the figure above,if the economy is at point A in year 1 and is expected to go to point B in year 2,Congress and the president would most likely pursue
A)expansionary fiscal policy. 
B)contractionary fiscal policy. 
C)expansionary monetary policy. 
D)contractionary monetary policy. 
E)expansionary automatic stabilizers.

Quizplus · Accepted Answer

If the economy is moving from point A to point B, it likely indicates an overheating economy with rising inflation. To counteract this, Congress and the president would pursue contractionary fiscal policy to reduce aggregate demand and control inflation.

Figure 16-6 -Refer to Figure 16-6.In the Dynamic Model of AD-AS in of AD-AS