Use the following to answer questions: -(Figure: Inflationary and Recessionary Gaps)Refer to Figure: Inflationary and Recessionary Gaps.In panel (a),an expansionary policy designed to move the economy from Y₁ to Y_P would attempt to shift the: A) aggregate demand curve to the left by increasing aggregate demand. B) aggregate demand curve to the right by increasing aggregate demand. C) SRAS curve to the left. D) LRAS curve to the left.

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To move the economy from Y₁ to Y_P, an expansionary policy is required which will increase aggregate demand. This can be achieved by shifting the aggregate demand curve to the right. Therefore, the correct choice is (B) aggregate demand curve to the right by increasing aggregate demand.

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