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How Would You Graphically Illustrate Counter-Cyclical Fiscal Policy Used to Eliminate

Question 60

Multiple Choice

How would you graphically illustrate counter-cyclical fiscal policy used to eliminate an inflationary gap?


A) A shift in the AS curve only.
B) A shift in the AS and the potential GDP curves.
C) A leftward shift in the AD curve.
D) A rightward shift in the AD curve.

Correct Answer:

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