The Diagram Below Shows an AD/AS Model for a Hypothetical

Multiple Choice

The diagram below shows an AD/AS model for a hypothetical economy which is initially in a short-run equilibrium at point A. FIGURE 24-7 Refer to Figure 24-7.The government could close the existing output gap by

A) increasing the net tax rate.
B) decreasing the net tax rate.
C) increasing government purchases.
D) decreasing government transfer payments.
E) implementing an expansionary fiscal policy.