One Advantage of Using Expansionary Fiscal Policy Rather Than Relying

question 85

Multiple Choice

One advantage of using expansionary fiscal policy rather than relying on automatic adjustment to recover from a recessionary gap is that

• A)the economy will overshoot potential GDP and a boom will be underway.
• B)inflation will not be as stimulated.
• C)price level will rise higher than otherwise.
• D)the recovery is likely to be more rapid.
• E)the recovery will be slower,thereby causing less disruption.

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