Expansionary Fiscal Policy Should Be Used If

question 19

Multiple Choice

Expansionary fiscal policy should be used if:

• A)aggregate demand-aggregate supply equilibrium is below potential output.
• B)aggregate demand-aggregate supply equilibrium is above potential output.
• C)aggregate demand-aggregate supply equilibrium is equal to potential output.
• D)none of the above.

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Definitions:

Gibbs Free Energy

A thermodynamic quantity representing the amount of usable energy in a system to perform work at constant temperature and pressure.

Equilibrium Constant

A numerical value that represents the ratio of concentrations of products to reactants at equilibrium in a chemical reaction.

Arrhenius Equation

An equation describing the rate of a chemical reaction as a function of temperature, providing a quantitative basis for the effect of temperature on reaction rates.

Ea

Activation energy, the minimum amount of energy required to initiate a chemical reaction.