If Strong Aggregate Demand Is Pushing the Economy Beyond Potential

question 229

Multiple Choice

If strong aggregate demand is pushing the economy beyond potential real GDP,which of the following must be true?

• A)The economy is at an equilibrium that is on the long-run aggregate supply curve.
• B)The economy is at an equilibrium that is on the long-run Phillips curve.
• C)The economy is at an equilibrium that is not on the long-run Phillips curve.
• D)Expansionary monetary policies will push the economy back to the long-run Phillips curve.

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Definitions:

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