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If an Economy Is at Potential GDP and an Expansionary

Question 2

Multiple Choice

If an economy is at potential GDP and an expansionary policy is correctly anticipated,the result will be:


A) a short-run fall in output and employment.
B) little or no increase in GDP.
C) an increase in wages along with a dramatic fall in the price level.
D) a rapidly expanding economy.
E) a severe recession.

Correct Answer:

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