One Advantage of Using Expansionary Fiscal Policy Rather Than Relying

question 53

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)the recovery may be more rapid.
• D)the recovery will be slower, thereby causing less disruption.
• E)price level will rise higher than otherwise.

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