AP® Macroeconomics

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Moderate

Fiscal Policy and Equilibrium

APMACR-DKEX1T

The Aggregate Demand curve crosses in the intermediate range of the Aggregate Supply curve. If the government decided to raise taxes but do no additional spending with the money then

A

the economy would likely recover to full employment.

B

stasis will resist change so Price Level and Output will likely persist.

C

the economy would likely fall further into recession.

D

the Price Level will climb.

E

Aggregate Supply will shift left.