When the economy is underperforming and policymakers pursue expansionary fiscal policy, they express a willingness to trade off _____ output for a _____ price level.

Question

Quizplus · Accepted Answer

Expansionary fiscal policy, aimed at stimulating economic growth, often leads to higher output as the government increases spending or cuts taxes. However, this can also lead to a higher price level (inflation) due to increased demand in the economy.

When the Economy Is Underperforming and Policymakers Pursue Expansionary Fiscal