When the economy is operating on the LRAS curve,then expansionary fiscal policy will
A) generate higher prices in the short run,but will induce aggregate supply to increase in the long run.
B) generate an increase in real national income and higher prices in both the short run and the long run.
C) generate an increase in real national income without higher prices in the short run,but then real national income will return to its long-run level and the price level will increase.
D) generate an increase in real national income and higher prices in the short run,but then real national income will decrease to its long-run level and the price level will increase some more.
Correct Answer:
Verified
Q39: To shift the aggregate demand curve outward
Q40: Suppose the economy is at an equilibrium
Q41: Figure 11-1 Q42: If the government increases spending while holding Q43: The tendency for expansionary fiscal policy to Q45: Expansionary fiscal policy falls short of its Q46: If other factors are held constant and Q47: If the economy is experiencing an inflationary Q48: If the government holds spending constant while Q49: If the government increases spending but doesn't
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