FIGURE 24-2 Refer to Figure 24-2

Multiple Choice

FIGURE 24-2 Refer to Figure 24-2.Suppose the economy is in a short-run equilibrium at Y₁.An appropriate fiscal policy for closing the output gap is

A) a decrease in personal income taxes.
B) a decrease in government purchases.
C) an increase in current interest rates.
D) an increase in government purchases.
E) a decrease in corporate income-tax rates.