If the economy has an inflationary GDP gap, one possible solution is to increase government expenditures.
Answer the following statement true (T) or false (F)
False
Increasing government expenditures will further increase the magnitude of the inflationary GDP gap. Fiscal restraint is tax hikes or spending cuts intended to reduce (shift) aggregate demand.
You might also like to view...
The change in output from hiring one additional unit of labor:
a. increasing marginal returns b. total cost c. marginal revenue d. marginal product of labor e. marginal cost
Which is NOT true about the use of economic models?
A) Economic models are simplified representations of the real world. B) Economists always use experiments in science laboratories to test their theories. C) Economists use what has already happened in the real world to test their theories. D) Economists are employed to explain economic phenomena but are never used to predict what might happen next.