Contractionary fiscal policy should be used if:
A) aggregate demand-aggregate supply equilibrium is below potential output.
B) aggregate demand-aggregate supply equilibrium is above potential output.
C) aggregate demand-aggregate supply equilibrium is equal to potential output.
D) none of the above.
B
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If a strategy is a best response, then
A) it will never be played. B) it will never be part of a Nash equilibrium. C) A and B are correct. D) it could be part of a Nash equilibrium.
The expression "social market economy," when applied to the German economic system, refers to
a. the poor performance of the German economy after World War II. b. the absence of national economic planning. c. the combination of state intervention and market forces to achieve desired social goals. d. the rejection of private ownership. e. none of the above.