Consider the Basic AD/AS Model,and Suppose There Is a Negative

question 108

Multiple Choice

Consider the basic AD/AS model,and suppose there is a negative output gap.If an expansionary fiscal policy is pursued and the AS curve shifts right unexpectedly,the fiscal policy may be ________,and real GDP may ________ potential GDP.

• A)too weak; stay below
• B)too weak; rise above
• C)too strong; stay below
• D)too strong; rise above
• E)appropriate; equal

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