Exhibit 23-6 -According to Exhibit 23-6, Line Abd Shows the Path of the Path

Multiple Choice

Exhibit 23-6
-According to Exhibit 23-6, line abd shows the path of potential GDP. Suppose that the Year 2 spending balance has the economy at point b where real GDP equals potential GDP. Which of the following would cause the economy to be at point c in Year 3?

A) There is an increase in wealth.
B) Firms decrease their optimism about the state of the economy.
C) The marginal propensity to consume decreases.
D) The quantity of imports increases.
E) The government increases taxes.