Assume a Keynesian AS curve. In the short run, when there is a large negative output gap (AD- intersection to the left of the full employment level of output), then O the government should use contractionary demand management policy O expansionary demand management policy is likely to be highly inflationary O expansionary demand management policy does not cause much inflation contractionary demand management policy is likely to be highly inflationary

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Assume a Keynesian AS curve. In the short run, when there is a large negative output gap (AD-AS
intersection to the left of the full employment level of output), then
O the government should use contractionary demand management policy
expansionary demand management policy is likely to be highly inflationary
O expansionary demand management policy does not cause much inflation
contractionary demand management policy is likely to be highly inflationary
Transcribed Image Text:Assume a Keynesian AS curve. In the short run, when there is a large negative output gap (AD-AS intersection to the left of the full employment level of output), then O the government should use contractionary demand management policy expansionary demand management policy is likely to be highly inflationary O expansionary demand management policy does not cause much inflation contractionary demand management policy is likely to be highly inflationary
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