Solved

Suppose That the Government Increases Spending More Than Is Necessary

Question 52

Multiple Choice

Suppose that the government increases spending more than is necessary to close a recessionary gap. What is the MOST likely result?


A) Inflation will increase.
B) The price level will decline.
C) The equilibrium real GDP will fall.
D) The equilibrium real GDP will fall short of potential GDP.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q47: Expansionary fiscal policy includes:<br>A) increasing taxes.<br>B) increasing

Q48: Fiscal policy that decreases aggregate demand is:<br>A)

Q49: Use the following to answer questions: <img

Q50: Use the following to answer questions: <img

Q51: Use the following to answer questions: <img

Q53: Use the following to answer questions: <img

Q54: To close a recessionary gap with fiscal

Q55: A recessionary gap can be closed with:<br>A)

Q56: Time lags associated with policy decision making

Q57: President Johnson's use of a temporary 10%