Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions:
-(Figure: Fiscal Policy Choices) Refer to Figure: Fiscal Policy Choices. If the government uses discretionary fiscal policy for the economy in panel (b) when real GDP is Y₁, government spending is likely to be _____ and taxes are likely to be _____.

A) reduced; cut
B) increased; increased
C) reduced; increased
D) increased; cut