Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions:
Figure: Policy Alternatives
-(Figure: Policy Alternatives) Refer to Figure: Policy Alternatives. In panel (b) , the economy is initially in short-run equilibrium at real GDP level Y₁ and price level P₂. If the government decides to intervene, it will MOST likely:

A) increase taxes.
B) decrease the quantity of money.
C) increase its spending.
D) decrease its spending.