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If the Short-Run Aggregate Supply Curve Intersects the Aggregate Demand

Question 27

Multiple Choice

If the short-run aggregate supply curve intersects the aggregate demand curve to the left of the long-run aggregate supply curve, then the economy has _____ gap, and the government can close the gap using _____ fiscal policy.


A) an inflationary; an expansionary
B) a recessionary; an expansionary
C) an inflationary; a contractionary
D) a recessionary; a contractionary

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