If Aggregate Demand Shifts Right and the President and Congress

question 23

Multiple Choice

If aggregate demand shifts right and the President and Congress want to use fiscal policy to reverse the change in output,they could

• A)increase government expenditures.If by the time policy has been implemented the economy has moved back to long-run equilibrium,then this policy will raise output above its long-run level.
• B)increase government expenditures.If by the time policy has been implemented the economy has moved back to long-run equilibrium,then this policy will reduce output to below its long-run level.
• C)decrease government expenditures.If by the time policy has been implemented the economy has moved back to long-run equilibrium,then this policy will raise output above its long-run level.
• D)decrease government expenditures.If by the time policy has been implemented the economy has moved back to long-run equilibrium,then this policy will reduce output to below its long-run level.

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Definitions:

Estoppel

A legal principle that prevents a person from arguing something contrary to a claim or a statement they have previously made and on which another party has relied.

Consideration

Something of value that is given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances.

Charitable Pledges

Promises to donate a specific amount of money or resources to a charity or non-profit organization.

Consideration

The value, in the form of money, goods, services, or a promise thereof, that is exchanged between parties as part of a contract.