Figure Policy Alternatives Panel a Price level P3 P P LRAS

Last updated: 12/6/2023

Figure Policy Alternatives Panel a Price level P3 P P LRAS SRAS AD Y Yp Y Real GDP SRAS Price level P3 P P Panel b LRAS SRAS AD Y Yp Y Real GDP AD 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 C decrease the quantity of money available increase the level of government purchases of goods and services D decrease the level of government purchases of goods