Question 1
Figure 16-5
Refer to Figure 16-5. 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
◦ expansionary fiscal policy.
◦ contractionary fiscal policy.
◦ expansionary monetary policy.
◦ contractionary monetary policy.
◦ contractionary automatic stabilizers.
Question 2
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
◦ increase the money supply and decrease the interest rate.
◦ increase taxes.
◦ increase government spending.
◦ increase oil prices.
◦ raise interest rates.
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