In any decision about stimulating the economy with a fiscal expansion (increasing government purchases), the government must weigh the short- run benefits of against the long- run costs of .
A)increased economic activity; lower economic growth
B)increased potential output; a higher price level
C)a higher price level; unemployment
D)increased real GDP; higher economic growth
E)a higher price level; lower real GDP

Question

Quizplus · Accepted Answer

In the short run, fiscal expansion can boost economic activity, but in the long run, it may lead to lower economic growth due to increased debt or inflationary pressures.

In Any Decision About Stimulating the Economy with a Fiscal