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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