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If the Effects of Contractionary Fiscal Policy Hit When the Economy

Question 80

Multiple Choice

If the effects of contractionary fiscal policy hit when the economy is already contracting,


A) the effects could lead to even deeper recession.
B) the policy will have no effect.
C) the policy is called an automatic stabilizer.
D) it may lead to excessive aggregate demand and inflation.
E) it will lead to stagflation.

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