FIGURE 22-5 Refer to Figure 22-5,Diagram 2

Multiple Choice

FIGURE 22-5 Refer to Figure 22-5,Diagram 2.Which of the following fiscal policy measures could the government implement to return national income to the full-employment level of GDP (potential output,Y*) ?

A) reduce government spending
B) reduce transfer payments
C) increase taxes
D) increase government spending
E) decrease disposable income