Which of the following is an accurate implication of adopting a government spending rule that produces a negative correlation between changes in gov- e rnment spending and the diffe rence between actual GDP and potential GDP?
A) Changes in taxes should be more effective in stimulating GDP.
B) Changes in taxes should be less effective in stimulating GDP.
C) Changes in the money supply should be more effective in stimulating GDP.
D) C h a n ges in the money supply should be less effe c t ive in stimu l ating GDP.
E) Both changes in taxes and changes in the money supply should be more effective in stimulating GDP.
Correct Answer:
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