Suppose the Current Level of Real GDP Is Below the Full-Employment

question 96

Multiple Choice

Suppose the current level of real GDP is below the full-employment level of real GDP. Which of the following represents a fiscal policy action that could be implemented to reduce the size of this recessionary gap?

• A) Increase government spending.
• B) Decrease interest rates.
• C) Increase the money supply.
• D) all of the above

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Definitions:

Coefficient

A numerical or constant quantity placed before and multiplying the variable in an algebraic expression, often representing a measure of some property.

Midpoint Formula

A method used in geometry and economics to find the midpoint or the average of two points on a line segment.

Consumer Expenditure

The total amount spent by consumers on goods and services in a given period.