Expansionary Fiscal Policy to Prevent Real GDP from Falling Below

question 52

Multiple Choice

Expansionary fiscal policy to prevent real GDP from falling below 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:

Activity Index

A measure or indicator used to assess the level of activity or productivity in a given context.

CVP Analysis

Cost-Volume-Profit Analysis, a managerial accounting method that examines the impact of varying levels of costs and volume on operating profit.

Manufacturing Costs

These are expenses directly related to the production of goods, including labor, materials, and overhead.

Selling

The process of promoting and transferring goods or services to a buyer in exchange for money.