If the economy has an inflationary GDP gap,one possible solution is to increase government expenditures.

Name: If the economy has an inflationary GDP gap,one possible solution is to increase government expenditures.
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Question

Quizplus · Accepted Answer

An inflationary GDP gap indicates an economy is operating above its potential output, leading to inflation. Increasing government expenditures would further stimulate demand, potentially worsening inflation rather than alleviating it.

If the Economy Has an Inflationary GDP Gap,one Possible Solution