Item2 Time Remaining 34 minutes 17 seconds00:34:17Item 2 Time Remaining 34 minutes 17 seconds00:34:17Contractionary fiscal policy is so named because itMultiple Choiceinvolves a contraction of the nation's money supply.is aimed at reducing aggregate demand and thus achieving price stability.is expressly designed to expand real GDP.necessarily reduces the size of government.

Contractionary fiscal policy is so named because itMultiple Choiceinvolves a contraction of the nation's money supply.is aimed at reducing aggregate demand and thus achieving price stability.is expressly designed to expand real GDP.necessarily reduces the size of government.

Item12 Time Remaining 37 minutes 56 seconds00:37:56Item 12 Time Remaining 37 minutes 56 seconds00:37:56A recession is defined as a period in whichMultiple Choicedemand-pull inflation is present.real GDP falls.nominal domestic output falls.cost-push inflation is present.

Fiscal policy can shift: Group of answer choicesboth aggregate demand and potential outputaggregate demand onlyonly short-run functionsboth aggregate demand and short-run aggregate supply, but not long-run aggregate supply

FISCAL POLICY

A decline in aggregate demand has caused a recession. The economy’s current level of real GDP is below its long-run equilibrium and the current price level is below the equilibrium price level. a. Without government action, the economy will return to long-run equilibrium through multiple choice 1a decrease in aggregate supply.a decrease in long-run aggregate supply.an increase in aggregate supply.an increase in long-run aggregate supply. b. If the government implements expansionary fiscal policy after the economy has self-corrected, the increase in aggregate demand will multiple choice 2decrease both real GDP and the price level.increase both real GDP and the price level.decrease real GDP and increase the price level.increase real GDP and decrease the price level. c. The slow fiscal policy will result in multiple choice 3low interest rates.high unemployment.demand-pull inflation.cost-push inflation.