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)a higher price level; unemployment
B)increased potential output; a higher price level
C)a higher price level; lower real GDP
D)increased real GDP; higher economic growth
E)increased economic activity; lower economic growth

Question

Quizplus · Accepted Answer

The short-run benefits of stimulating the economy with fiscal expansion include increased economic activity, such as higher employment and production. However, the long-run costs can involve lower economic growth due to factors like increased debt or inflation that can result from such policies.

In Any Decision About Stimulating the Economy with a Fiscal