If the GDP gap is $400 billion and AS is upward-sloping,an effective fiscal policy would be to increase aggregate demand by $400 billion.

Name: If the GDP gap is $400 billion and AS is upward-sloping,an effective fiscal policy would be to increase aggregate demand by $400 billion.
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An effective fiscal policy would need to increase aggregate demand by more than $400 billion due to the multiplier effect, which amplifies the initial change in spending.

If the GDP Gap Is $400 Billion and AS Is