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If the Aggregate Supply Curve Is Flat

Question 180

Multiple Choice

If the aggregate supply curve is flat,


A) expansionary fiscal or monetary policy will cause a good deal of inflation with little increase in real output.
B) expansionary fiscal or monetary policy will buy large gains in real output at low cost in terms of inflation.
C) a contractionary stabilization policy is an effective way to reduce inflation.
D) decreasing the income tax will not shift aggregate demand.

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