Multiple Choice
Which statement(s) about fiscal policy and aggregate demand is/are correct? I. A reduction in unemployment compensation would increase aggregate demand.
II) An increase in government spending would increase aggregate demand.
III) An increase in government spending would increase aggregate demand and lead to a permanent increase in aggregate output if government spending is implemented when the economy is in long-run equilibrium.
A) I only
B) II only
C) II and III only
D) I and III only
Correct Answer:
Verified
Correct Answer:
Verified
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