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Consider the Basic AD/AS Model,and Suppose There Is a Negative

Question 108

Multiple Choice

Consider the basic AD/AS model,and suppose there is a negative output gap.If an expansionary fiscal policy is pursued and the AS curve shifts right unexpectedly,the fiscal policy may be ________,and real GDP may ________ potential GDP.


A) too weak; stay below
B) too weak; rise above
C) too strong; stay below
D) too strong; rise above
E) appropriate; equal

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