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:

Wandering

An aimless or undirected movement or thought pattern.

Asleep

A state of rest where consciousness is suspended, and the body undergoes recovery and growth processes.

Sleepwalking

A sleep disorder that involves getting up and walking around or performing other complex behaviors while in a state of sleep, typically occurring during deep sleep phases.

Prone

Having a natural inclination or tendency towards something, often used in the context of susceptibility to a condition or disease.