The figure to the right illustrates the

dynamic AD-AS model

LOADING...

.

Part 2Suppose the economy is in equilibrium in the first period at point? (A). In the second? period, the economy reaches point? (B). What policy would the federal government likely pursue in order to move

AD2

to

AD2,policy

and reach equilibrium? (point C) in the second? period?Part 3

A.

Open market purchase of government securities

B.

Increase government spending

C.

Increase taxes

D.

All of the above