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​ ​ Exhibit 16A-2 Macro AD/AS Models

Question 141

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​ ​ Exhibit 16A-2 Macro AD/AS Models
​
​ ​ Exhibit 16A-2 Macro AD/AS Models ​ ​ In Panel (b) of Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y<sub>1</sub> and price level P<sub>2</sub>. If the federal government or Fed decides to intervene, it would most likely: A) ​decrease taxes. B) ​increase the money supply. C) increase the level of government spending for goods and services.​ D) ​decrease the level of government spending for goods and services.
​ In Panel (b) of Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y1 and price level P2. If the federal government or Fed decides to intervene, it would most likely:


A) ​decrease taxes.
B) ​increase the money supply.
C) increase the level of government spending for goods and services.​
D) ​decrease the level of government spending for goods and services.

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