16. A contractionary fiscal policy shifts (A) aggregate demand to the right(B) aggregate demand to the left(C) aggregate supply to the right(D) aggregate supply to the left(E) both aggregate demand and aggregate supply to the leftEffect of Fiscal Policy on Consumption, Investment, Aggregate Output and Employment 17. When government spending increases without a change in taxes: 18. When taxes decrease without a change in government spending: 19. When government spending increases and taxes increase by an equal amount: 20. If the economy is in a severe recession, which of the following is the fiscal policy most effective in stimulating production?
(A) Government spending increases.(B) Government spending decreases.(C) Personal income taxes are increased.(D) The Federal Reserve sells bonds on the open market.(E) The Federal Reserve buys bonds on the open market.Comment: it’s also an expansionary method of stimulating the economy but it’s monetary policy 21. In an economy at full employment, a presidential candidate proposes cutting the government debt inhalf in four years by increasing income tax rates and reducing government expenditures. Accordingto Keynesian theory, implementation of these policies is most likely to increase