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(05.01 MC) Use the graph to answer the question that follows. A graph has Real GDP along the horizontal axis and Price Level along the

(05.01 MC) Use the graph to answer the question that follows. A graph has Real GDP along the horizontal axis and Price Level along the vertical axis. An upward sloping curve is labeled SRAS. A downward sloping curve labeled AD intersects SRAS at E0. A second downward sloping curve labeled AD prime intersects SRAS at E1. E1 is higher and to the right of E0. In the accompanying graph, the short-run equilibrium of the economy changes from E0 to E1. Which of the following fiscal policy initiatives can explain this change? (1 point) A decrease in government spending The purchase of government bonds by the central bank A reduction in income tax rates A decrease in transfer payments An increase in the national debt

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