If Real GDP Exceeded Potential Real GDP and Inflation Was

question 12

Multiple Choice

If real GDP exceeded potential real GDP and inflation was increasing,which of the following would be an appropriate fiscal policy?

• A)a decrease in the money supply and an increase in the interest rate
• B)an increase in government spending
• C)an increase in taxes
• D)an increase in oil prices

---

Definitions:

Iliacus

A muscle in the pelvis that, together with the psoas major, forms the iliopsoas, which is involved in flexing and rotating the thigh.

Psoas Major

A deep-seated muscle of the back that helps in flexing the hip and the lumbar spine.

Medial Rotation

A rotational movement towards the midline of the body.

Biceps Femoris

A muscle of the thigh that is part of the hamstring group, involved in knee flexion and thigh extension.