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Which of the Following Statements Is True

Question 119

Multiple Choice

Which of the following statements is true?


A) In the short run, changes in fiscal policy mainly affect potential GDP.
B) Fiscal policy's initial impact on real GDP is permanent.
C) Fiscal policy does not have the potential to reduce the size of economic fluctuations.
D) Erratic changes in fiscal policy can increase economic fluctuations.
E) Fiscal policy cannot cause erratic fluctuations in real GDP.

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