If a Passive Approach to Policy Was Followed,how Would an Expansionary

question 114

Multiple Choice

If a passive approach to policy was followed,how would an expansionary gap eventually close?

• A)Restrictive fiscal policy would be used.
• B)Restrictive monetary policy would be used.
• C)Both restrictive fiscal policy and restrictive monetary policy would be used.
• D)Inflation would cure the problem because the price level in an expansionary gap is lower than firms and workers had expected.
• E)Inflation would cure the problem because the price level in an expansionary gap is higher than firms and workers had expected.

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Definitions:

Self-Indulgence

Excessive or unrestrained gratification of one's own appetites, desires, or whims.

Stress

A physical, mental, or emotional factor that causes bodily or mental tension.

Self-Indulgence

The excessive or unrestrained gratification of one's own desires, needs, or whims, often at the expense of others or one's own well-being.

Stress

A physical or emotional response to external pressures or demands that can be perceived as challenging or threatening.