Contractionary Fiscal Policy to Prevent Real GDP from Rising Above

question 302

Multiple Choice

Contractionary fiscal policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be ________ and real GDP to be ________.

• A)higher; higher
• B)higher; lower
• C)lower; higher
• D)lower; lower

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Definitions:

Stimulation

The activity of encouraging something to grow, develop, or become active, often related to sensory or intellectual input.

Memory Task

A psychological test or exercise designed to assess or enhance an individual's ability to remember information.

Probability Level

The likelihood or chance of an event occurring, often expressed as a percentage or a fraction.

Statistically Significant

Statistically significant results are those that are unlikely to have occurred by chance alone, indicating a high probability that observed differences or relationships are real.