(Figure: Fiscal Policy Options) Use Figure: Fiscal Policy Options. If the aggregate demand curve is AD'':
A) the economy is in long-run equilibrium.
B) the economy is in long-run equilibrium
C) an expansionary fiscal policy may be warranted.
D) an expansionary fiscal policy may be warranted
E) a contractionary fiscal policy may be warranted.
F) a contractionary fiscal policy may be warranted
G) the economy is in a recessionary gap
H) the economy is in a recessionary gap.
Correct Answer:
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