If aggregate demand shifts right and the President and Congress want to use fiscal policy to reverse the change in output, they could
a. increase government expenditures. If by the time policy has been implemented the economy has moved back to long-run equilibrium, then this policy will raise output above its long-run level.
b. increase government expenditures. If by the time policy has been implemented the economy has moved back to long-run equilibrium, then this policy will reduce output to below its long-run level.
c. decrease government expenditures. If by the time policy has been implemented the economy has moved back to long-run equilibrium, then this policy will raise output above its long-run level.
d. decrease government expenditures. If by the time policy has been implemented the economy has moved back to long-run equilibrium, then this policy will reduce output to below its long-run level.
d
You might also like to view...
According to classical theory, full employment in the labor market occurs
A) only when actual expenditures are greater than desired expenditures. B) only when the economy has just experienced a demand shock. C) whenever aggregate demand is less than aggregate supply. D) at a wage rate at which quantity demanded equals quantity supplied.
Becky received a raise at work. She now substitutes Kraft Macaroni and Cheese for generic macaroni and cheese. Kraft Macaroni and Cheese is an example of:
a. Inferior Good b. Market Good c. Normal Good d. Brand Good