If Consumer and Business Sentiment Were to Increase Dramatically, Causing

Multiple Choice

If consumer and business sentiment were to increase dramatically, causing an expansionary gap:

A) Monetary policymakers could stabilize the economy by shifting their monetary policy reaction curve to the right
B) Fiscal policymakers could stabilize aggregate demand by cutting income and business taxes
C) Monetary policymakers would likely shift the monetary policy reaction curve to the left to shift the dynamic aggregate demand left
D) Fiscal policymakers could stabilize aggregate demand by increasing government purchases