In the Long Run, How Would an Active Approach to a Contractionary

question 18

Multiple Choice

In the long run, how would an active approach to a contractionary gap differ from a passive approach to policy?

• A)Both the price level and the level of real GDP would be higher in the long run with the activist solution.
• B)Both the price level and the level of real GDP would be lower in the long run with the activist solution.
• C)The price level would be higher and the level of real GDP would be lower in the long run with the activist solution.
• D)Only the price level would be lower in the long run with the activist solution.
• E)Only the price level would be higher in the long run with the activist solution.

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