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Question 32

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Use the following to answer questions:
Figure: Policy Alternatives Use the following to answer questions: Figure: Policy Alternatives -(Figure: Policy Alternatives) Refer to Figure: Policy Alternatives. If the economy is in equilibrium at Y<sub>1</sub> in panel (a) and government spending increases, the result will likely be: A) an increase in unemployment. B) a decrease in interest rates. C) inflation. D) deflation.
-(Figure: Policy Alternatives) Refer to Figure: Policy Alternatives. If the economy is in equilibrium at Y1 in panel (a) and government spending increases, the result will likely be:


A) an increase in unemployment.
B) a decrease in interest rates.
C) inflation.
D) deflation.

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