??Exhibit 16A-2 Macro AD/AS Models
?
?In Panel (a) of Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y1 and price level P2. If the federal government or Fed decides to intervene, it would most likely:
A. ?increase taxes.
B. ?decrease the money supply.
C. ?increase the level of government spending for goods and services.
D. ?decrease the level of government spending for goods and services.
Answer: C
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