If the Aggregate Supply Curve Is Flat

question 161

Multiple Choice

If the aggregate supply curve is flat,

• A)expansionary fiscal or monetary policy will cause a good deal of inflation with little increase in real output.
• B)expansionary fiscal or monetary policy will buy large gains in real output at low cost in terms of inflation.
• C)a contractionary stabilization policy is an effective way to reduce inflation.
• D)decreasing the income tax will not shift aggregate demand.

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