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 strong; rise above
B) too weak; stay below
C) too weak; rise above
D) appropriate; equal
E) too strong; stay below
Correct Answer:
Verified
Correct Answer:
Verified
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