Since Potential GDP Defines Aggregate Supply in the Long Run

question 17

Multiple Choice

Since potential GDP defines aggregate supply in the long run, it makes sense that

• A) only monetary policy is neutral in the long run, because fiscal policy can influence the determinants of potential GDP in the short run.
• B) only fiscal policy is neutral in the long run, because monetary policy can influence the determinants of potential GDP in the short run.
• C) both monetary policy and fiscal policy are neutral in the long run, because neither can influence the determinants of potential GDP in the short run.
• D) both monetary policy and fiscal policy are effective in the long run, because both can influence the determinants of potential GDP in the short run.
• E) none of the above.

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Definitions:

Pink Cadillacs

traditionally associated with the success markers of Mary Kay cosmetics representatives, symbolizing achievement and recognition within their sales incentive program.

Sales Goals

Target figures set by businesses or individuals for the sale of products or services within a specific time frame.

Pragmatic View

An approach stressing practicality and effectiveness, focusing on results and solutions that work in specific situations.