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Given AD1 and AS1 in Figure 8

Question 40

Multiple Choice

Given AD<sub>1</sub> and AS<sub>1</sub> in Figure 8.3,the classical approach to achieving full employment at an output of $300 billion would be to A) Increase taxes and increase government spending to shift AD<sub>1</sub> to AD<sub>2</sub>. B) Increase the growth of the money supply to shift AD<sub>1</sub> to AD<sub>2</sub>. C) Do nothing and wait for natural market forces to achieve full employment. D) Use all available supply-side options. Given AD1 and AS1 in Figure 8.3,the classical approach to achieving full employment at an output of $300 billion would be to


A) Increase taxes and increase government spending to shift AD1 to AD2.
B) Increase the growth of the money supply to shift AD1 to AD2.
C) Do nothing and wait for "natural" market forces to achieve full employment.
D) Use all available supply-side options.

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