For this economy to produce Y1 and sustain it without inflation a) the price of oil must increase. b) the government must implement an expansionary fiscal policy. c) the government must implement an expansionary monetary policy. d) potential output must increase.

For this economy to produce Y1 and sustain it without inflation a) the price of oil must increase. b) the government must implement an expansionary fiscal policy. c) the government must implement an expansionary monetary policy. d) potential output must increase.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter3: Demand And Supply

Section: Chapter Questions

Problem 47CTQ: Agricultural price supports result in governments holding large inventories of agricultural...

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Question

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For this economy to produce Y1 and sustain it without inflation
a) the price of oil must increase.
b) the government must implement an expansionary fiscal policy.
c) the government must implement an expansionary monetary policy.
d) potential output must increase.

LRAS AS1
ASo
AS2
C.
DA
AD1
ADo
AD2
Y2 Yo Y
Aggregate output ($ billion)
Price level

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