In Any Decision About Stimulating the Economy with a Fiscal

Multiple Choice

In any decision about stimulating the economy with a fiscal expansion (increasing government purchases) ,the government must weigh the short-run benefits of ________ against the long-run costs of ________.

A) a higher price level; unemployment
B) increased potential output; a higher price level
C) a higher price level; lower real GDP
D) increased real GDP; higher economic growth
E) increased economic activity; lower economic growth