Use the Following to Answer Questions

question 36

Multiple Choice

Use the following to answer questions .
Exhibit: Aggregate Demand and Aggregate Supply and the Great Depression
-(Exhibit: Aggregate Demand and Aggregate Supply and the Great Depression) Suppose the U.S. economy is at point j. With the onset of World War II, expansionary fiscal policies forced by the war pushed into an inflationary gap. Which of the following best illustrates this event?

• A) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_n - Y_P).
• B) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_m - Y_P).
• C) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_m - Y_j).
• D) expansionary fiscal policies shifted the aggregate demand curve, creating an inflationary gap equal to (Y_n - Y_j).

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Definitions:

Complex Strategies

Involves multifaceted and often sophisticated plans or methods aimed at achieving a particular goal or solving specific problems.

Subgoals

Intermediate goals or problems to solve that put one in a better position for reaching a final goal or solution.

Evaluating

The process of assessing or judging the value, nature, character, or quality of something through careful consideration and analysis.

Trial-and-Error

A problem-solving method involving repeated, varied attempts to find a solution, learning from the failures along the way.