Suppose That Instead of Using Discretionary Fiscal Policy to Close

question 146

Multiple Choice

Suppose that instead of using discretionary fiscal policy to close an expansionary gap, policymakers left the economy alone.What would probably happen?  

• A) Depression would result. 
• B) The economy would be stuck in the gap. 
• C) The aggregate demand curve would shift, eliminating the problem. 
• D) The gap would close after a spurt of inflation.

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Definitions:

Federal Budget

An annual financial statement presenting the government's proposed revenues and spending for a fiscal year, outlining the allocation of funds across various government departments and programs.

Monroe Doctrine

A U.S. foreign policy doctrine declared in 1823, stating that further efforts by European nations to colonize land or interfere with states in North or South America would be viewed as acts of aggression, requiring U.S. intervention.

Nineteenth Century

A period extending from the year 1801 to 1900, marked by significant industrial, cultural, and political changes globally.

Colonial Governments

Administrations established in colonies to oversee and manage the territories on behalf of the colonizing country.