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