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The government is concerned about an inflationary gap. Shift the AD curve to provide a graphical representation of an inflationary gap and move the point, ESR, to the short-run equilibrium associated with the inflationary gap. Which of the following policies will help to eliminate the inflationary gap? O an increase in government transfers a tax cut an increase in military spending an increase in taxes Aggregate price level SR LRAS Real GDP AD SRAS

The government is concerned about an inflationary gap. Shift the AD curve to provide a graphical representation of an inflationary gap and move the point, ESR, to the short-run equilibrium associated with the inflationary gap. Which of the following policies will help to eliminate the inflationary gap? O an increase in government transfers a tax cut an increase in military spending an increase in taxes Aggregate price level SR LRAS Real GDP AD SRAS

MACROECONOMICS
MACROECONOMICS
14th Edition
ISBN:9781337794985
Author:Baumol
Publisher:Baumol
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section: Chapter Questions
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The government is concerned about an inflationary gap. Shift the AD curve to provide a graphical representation of an inflationary gap and move the point, ESR, to the short-run equilibrium associated with the inflationary gap. Which of the following policies will help to eliminate the inflationary gap? O an increase in government transfers a tax cut an increase in military spending an increase in taxes Aggregate price level SR LRAS Real GDP AD SRAS
Transcribed Image Text:The government is concerned about an inflationary gap. Shift the AD curve to provide a graphical representation of an inflationary gap and move the point, ESR, to the short-run equilibrium associated with the inflationary gap. Which of the following policies will help to eliminate the inflationary gap? O an increase in government transfers a tax cut an increase in military spending an increase in taxes Aggregate price level SR LRAS Real GDP AD SRAS
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