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    Question

    Expansionary fiscal policy in the classical

    model will cause aggregate demand to-----potential output?
    A Exceed Correct Answer Incorrect Answer
    B Fall below Correct Answer Incorrect Answer
    C Remain equal to Correct Answer Incorrect Answer
    D Fluctuate around Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Expansionary fiscal policy in the classical model will cause aggregate demand to remain equal to potential output 

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