(Figure: Aggregate Demand and Supply) The graph depicts an economy originally in equilibrium at point e . Assume that the government uses expansionary fiscal policy. The movement from point a to point...

(Figure: Aggregate Demand and Supply) The graph depicts an economy originally in equilibrium at pointe. Assume that the government uses expansionary fiscal policy. The movement from pointa to pointb is due to

- workers and suppliers adjusting their expectations to higher price levels.

- workers and suppliers adjusting their expectations to lower price levels.

- increased consumer spending brought about by increased government spending and/or lower taxes.

- decreased consumer spending brought about by increased government spending and/or lower taxes.

LRAS<br>SRAS2<br>SRAS,<br>b<br>P2<br>AD<br>Po<br>AD<br>Aggregate Output (0)<br>Aggregate Price Level (P)<br>

Extracted text: LRAS SRAS2 SRAS, b P2 AD Po AD Aggregate Output (0) Aggregate Price Level (P)

Jun 10, 2022

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(Figure: Aggregate Demand and Supply) The graph depicts an economy originally in equilibrium at point e . Assume that the government uses expansionary fiscal policy. The movement from point a to point...

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