Ceteris paribus,if the AD shortfall equals $600 billion,then the federal government can close it by increasing

Question

Quizplus · Accepted Answer

Increasing government spending by exactly $600 billion would close the AD shortfall, but it is not feasible as it could lead to inflation and other economic problems. However, increasing government spending by less than $600 billion, combined with other policies such as tax cuts or monetary policy, could effectively close the AD shortfall without causing inflationary pressures. Therefore, the best choice is B.

Ceteris Paribus,if the AD Shortfall Equals $600 Billion,then the Federal