Appleville is a village that specializes in all forms of apple products. Suppose that each winter, when no apples are being produced, the aggregate output falls below the long-run output level. What type of fiscal policy might be most effective to correct this problem?
A) Reducing taxes in order to decrease aggregate demand.
B) Increasing government spending in order to increase aggregate demand.
C) Decreasing government spending in order to increase aggregate demand.
D) Increasing taxes in order to increase aggregate demand.
Ans: B) Increasing government spending in order to increase aggregate demand.
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