Question 1
Refer to the information provided in Figure 27.2 below to answer the question(s) that follow.
Refer to Figure 27.2. Firms respond to a decrease in net taxes by mostly increasing output when the aggregate demand curve shifts from
◦
AD1 to
AD2.
◦
AD3 to
AD4.
◦
AD5 to
AD6.
◦
AD6 to
AD1.
Question 2
Refer to the information provided in Figure 27.2 below to answer the question(s) that follow.
Refer to Figure 27.2. In response to an increase in government spending, the Fed would increase the interest rate by the greatest amount when the aggregate demand curve shifts from
◦
AD1 to
AD2.
◦
AD3 to
AD4.
◦
AD5 to
AD6.
◦
AD6 to
AD1.