With respect to the economy depicted in the graph below: a b C Price Level (P) d P₁ Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. SRAS AD₁ 800 920 Real GDP = Q($billions) Keynes would argue in favor of using discretionary expansionary fiscal policy to increase aggregate demand. Keynes would argue that discretionary fiscal policy is likely to lead to an increase in aggregate demand that will be offset by a decrease in aggregate supply. the classicals would argue that a policy of laissez-faire should be adhered to because the economy will automatically adjust to close the inflationary gap. the classicals would argue in favor of using both nondiscretionary and discretionary fiscal policy to stimulate economic activity.

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