Solved

If the AS Curve Is Upward-Sloping,the Government Alone Should Raise

Question 139

True/False

If the AS curve is upward-sloping,the government alone should raise its purchases by the amount of the AD shortfall in order to reach full-employment equilibrium.
As long as the AS curve slopes upward,the aggregate demand must increase by more than the size of the recessionary GDP gap in order to achieve full employment.However,it is not necessary for the government to make up the entire shortfall in aggregate demand.Every dollar of new autonomous government spending has a multiplied impact on induced aggregate demand.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents