Question 1
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 a decrease in net taxes, the Fed would increase the interest rate by the least amount when the aggregate demand curve shifts from
◦
AD1 to
AD2.
◦
AD3 to
AD4.
◦
AD5 to
AD6.
◦
AD1 to
AD6.
Question 2
Refer to the information provided in Figure 27.2 below to answer the question(s) that follow.


Refer to Figure 27.2. Planned investment would experience the greatest amount of crowding out when the aggregate demand curve shifts from
◦
AD1 to
AD2.
◦
AD3 to
AD4.
◦
AD5 to
AD6.
◦ The amount of crowding out is the same for all
AD curve shifts shown in the figure.