If the economy is growing beyond potential real GDP, which of the following would be an appropriate fiscal policy to bring the economy back to long-run aggregate supply? An increase in

A) the money supply and a decrease in interest rates.
B) government purchases.
C) oil prices.
D) taxes.

Answer: D

Economics

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Empirical evidence that changes in monetary policy do not cause rapid price adjustments ________

A) is consistent with the Keynesian emphasis on short-run economic fluctuations B) suggests that policymakers need not worry much about inflation C) remains limited and unconvincing D) is consistent with the classical dichotomy E) none of the above

Economics