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If the Economy Is in Equilibrium with Real GDP Less

Question 208

Multiple Choice

If the economy is in equilibrium with real GDP less than potential GDP,there is ________ gap and a fiscal policy that ________ is appropriate.


A) an inflationary;increases aggregate demand
B) an inflationary;decreases aggregate demand
C) a recessionary;increases aggregate demand
D) a recessionary;decreases aggregate demand
E) a recessionary;increases potential GDP

Correct Answer:

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