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The Diagram Below Is for a Closed Economy Which Begins

question 55

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The diagram below is for a closed economy which begins in long-run equilibrium at Y* and P0.
The diagram below is for a closed economy which begins in long-run equilibrium at Y* and P0. FIGURE 31-3 -Refer to Figure 31-3.Suppose the government implements an expansionary fiscal policy which increases the budget deficit.The initial effect of this policy is the opening of a(n) ________ gap, and a new short -run equilibrium with a price level of ________ and real GDP of ________. A) recessionary; P1; Y2 B) inflationary; P1; Y* C) inflationary; P2; Y* D) inflationary; P1; Y1 E) recessionary; P0; Y* FIGURE 31-3
-Refer to Figure 31-3.Suppose the government implements an expansionary fiscal policy which increases the budget deficit.The initial effect of this policy is the opening of a(n) ________ gap, and a new short -run equilibrium with a price level of ________ and real GDP of ________.

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