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.
E) The economy is at an equilibrium that is at the intersection of the short-run Phillips curve and the long-run Phillips curve.
Correct Answer:
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