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If an Economy Is in an Equilibrium with an Inflationary

Question 21

Multiple Choice

If an economy is in an equilibrium with an inflationary gap, policy-makers can use


A) discretionary fiscal policy and cut taxes.
B) automatic fiscal policy and increase government expenditure.
C) discretionary fiscal policy and increase government expenditure.
D) automatic fiscal policy and cut taxes.
E) discretionary fiscal policy and decrease government expenditure.

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