nibiscmsmodibisp City University of New York x US war costs

n/ibiscms/mod/ibisp )City University of New York ..x US war costs in Jum Print Calculator estion 16 of 21 incorrect . 1 Incorrect . .ncomoct Map Sapling Learning Consider the economy represented by the AD/AS diagram below, where the economy is not at full in the box below is one that a Keynesian economist might suggest to the employment. Which policy ar and the economy reaches higher than full employment. t? Show what happens in the short run on the graph below if the policy moves the economy too LRAS SRAS Govenment building an island off the coast of Maryland Reduce government spending on bridges and roads Increase taxes on consumers Decrease the rent because the rent is too high O Elimination of quotas on imported goods AD Real GDP

Solution

Government building an island is something a Keynesian economist might suggest as they advocate government spending to stimulate aggregate demand.

The AD curve shifts too far to the right and the equilibrium price level increases along with equilibrium real GDP.