The graph below shows real GDP levels over time. Answer the following questions based on this groph.Real GDPTBusiness CycleTimeY"a. At time T. what is the economy experiencing?O full-employment outputan economic expansionan economic contractionb. In order to smooth out the business cycle, what type of fiscal policy should the government undertake?contractionary fiscal policyexpansionary fiscal policyc. What type of actions might the government take?a decrease in taxes and an increase in government purchasesa decrease in both taxes and govemment purchasesan increase in taxes and a decrease in government purchasesan increase in both taxes and government purchases

As per John Maynard Keynes, business cycles occur as a consequence of swings in aggregate demand,…

The graph below shows real GDP levels over time. Answer the following questions based on this groph. Real GDP T Business Cycle Time Yo a. At time T. what is the economy experiencing? O full-employment output an economic expansion O an economic contraction b. In order to smooth out the business cycle, what type of fiscal policy should the government undertake? O contractionary fiscal policy O expansionary fiscal policy c. What type of actions might the government take? O a decrease in taxes and an increase in government purchases O a decrease in both taxes and govemment purchases O an increase in taxes and a decrease in government purchases O an increase in both taxes and government purchases