Multiple Choice
Assume the economy is in short-run equilibrium at a real GDP above its potential real GDP. According to classical theory, which of the following policies should be followed?
A) The Federal Reserve should use open market operations and buy U.S. government securities.
B) The Federal Reserve should not follow a fixed rule.
C) The federal government should cut taxes.
D) Fiscal policy and monetary policy should not be activist.
Correct Answer:
Verified
Correct Answer:
Verified
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