Assuming the economy represented in the graph shown is currently at point B, if the government does nothing, then eventually:
A) SRAS will shift to the right, and the economy will have Y3 output with lower prices.
B) SRAS will shift left, and the economy will experience stagflation.
C) LRAS will shift left, until lower equilibrium output is reached with lower prices.
D) the entire economy will collapse.
Correct Answer:
Verified
Q36: The effect of an initial spending change
Q36: If the government enacts contractionary fiscal policy,
Q37: Increased government spending is an example of:
A)
Q38: We use the term expansionary fiscal policy
Q39: If the government undertakes expansionary fiscal policy,
Q40: Contractionary fiscal policy is enacted when the
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