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Figure: Policy Alternatives Panel (b) Panel (a) Price level Price level LRAS LRAS SRAS SRAS P3 Ps SRAS2 P2 P2 P P AD Y
Figure: Policy Alternatives Panel (b) Panel (a) Price level Price level LRAS LRAS SRAS SRAS P3 Ps SRAS2 P2 P2 P P AD Y Yp Y2 AD AD Y Yp Y2 Real GDP Real GDP 17. (Figure: Policy Alternatives) In Panel (b), the economy is initially in short-run equilibrium at real GDP level Y and price level P2. If the government decides to intervene, it would most likely: A) increase taxes. B) decrease the quantity of money available. C) D) increase the level of government purchases of goods and services. decrease the level of governme purchases.c
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