Refer to Figure 16.1. -Refer to Figure 16.1.If the economy is initially in equilibrium at P₁ and Q₂,the appropriate policy to move the economy to an equilibrium at P₂ and Q₃ would be to: A) Reduce immigration barriers. B) Increase the marginal tax rate. C) Increase government spending. D) Increase interest rates.

Question

Quizplus · Accepted Answer

Increasing government spending is a fiscal policy tool used to stimulate demand in the economy, which can shift the equilibrium to a higher price and quantity level, as described in the scenario.