Under Which of the Following Scenarios Would Expansionary Fiscal Policy

question 39

Multiple Choice

Under which of the following scenarios would expansionary fiscal policy work best?

• A) when two real shocks have occurred
• B) when the economy is at equilibrium in the long run
• C) when the economy has had a large negative supply shock
• D) when AD is low compared to the long-run equilibrium position of the economy

---

Definitions:

4.2%

Often represents a percentage rate, such as an interest rate or growth rate, quantifying an increase or yield on an investment or financial product.

3-Year Period

A specific timeframe that spans three consecutive years.

Post-secondary Education

Education that occurs after high school, including programs at colleges, universities, and technical schools.

Anticipate

To expect or predict something based on current knowledge or trends, often involving preparation for a known event or condition.