-In the above figure, suppose the economy had been at point A and now is at B. What could have led to the movement to B?
A) a tax hike
B) an increase in government expenditures on goods and services
C) Winter storms cause factories in the north to be shut down for several weeks.
D) an increase in the money wage rates

Question

-In the above figure, suppose the economy had been at point A and now is at B. What could have led to the movement to B?
A) a tax hike 
B) an increase in government expenditures on goods and services 
C) Winter storms cause factories in the north to be shut down for several weeks. 
D) an increase in the money wage rates

Quizplus · Accepted Answer

An increase in government expenditures on goods and services can lead to an expansionary fiscal policy effect, which stimulates aggregate demand, moving the economy from point A to point B. This is because higher government spending directly increases demand for goods and services, boosting economic activity.

-In the Above Figure, Suppose the Economy Had Been at Point