Suppose the Economy Is on the Classical Range of the Aggregate

question 82

Multiple Choice

Suppose the economy is on the classical range of the aggregate supply curve and has a problem with inflation. According to Keynesian theory, which of the following is an appropriate discretionary fiscal policy to use in this situation?

• A) A reduction in the money supply.
• B) Less government regulation.
• C) Increase federal spending.
• D) Higher taxes.

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