Solved

The Figure Above Shows an Economy's Aggregate Demand Curve, Aggregate

Question 4

Multiple Choice

The figure above shows an economy's aggregate demand curve, aggregate supply curve, and potential GDP. -In the figure above, to use fiscal policy to move the economy back to potential GDP, the government must decrease government expenditure by ________ $1 trillion and/or increase taxes by ________ $1 trillion. A) recessionary; more than; more than B) inflationary; less than; more than C) inflationary; exactly; exactly D) inflationary; less than; less than E) recessionary; less than; less than
The figure above shows an economy's aggregate demand curve, aggregate supply curve, and potential GDP.
-In the figure above, to use fiscal policy to move the economy back to potential GDP, the government must decrease government expenditure by ________ $1 trillion and/or increase taxes by ________ $1 trillion.


A) recessionary; more than; more than
B) inflationary; less than; more than
C) inflationary; exactly; exactly
D) inflationary; less than; less than
E) recessionary; less than; less than

Correct Answer:

verifed

Verified

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

Related Questions

Q2: Compare the views of Keynesian and mainstream

Q3: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB1454/.jpg" alt=" The figure

Q6: The government expenditure multiplier reflects the magnification

Q21: If the federal government has a budget

Q31: A fiscal stimulus works to close a

Q37: When government outlays are less than tax

Q76: Assume the federal government raises taxes (a

Q91: Automatic stabilizers decrease the impact of a

Q122: Needs-tested spending is defined as<br>A)spending by Congress

Q208: If government expenditure on goods and services