(Last Word) In response to the Great Recession, the federal government engaged in significant deficit-funded spending.While it kept the recession from getting worse, and did result in some positive economic growth, it did not fully achieve the desired result.Which of the following best explains why the fiscal policy actions fell short of their objective?
A) Despite the fiscal stimulus, aggregate demand continued to shift to the right.
B) The fiscal stimulus caused a significant leftward shift of aggregate supply.
C) Offsetting monetary policy caused the aggregate demand to remain virtually unchanged, meaning that all gains in output came from aggregate supply shifts.
D) The fiscal stimulus shifted aggregate demand to the right, but not enough to restore full employment.
Correct Answer:
Verified
Q78: A decrease in aggregate demand will cause
Q79: Q80: When aggregate demand declines, many firms may Q81: An increase in imports (independent of a Q82: In the immediate short run, both input Q85: (Last Word) In response to the Great Q87: (Consider This) The idea that the price Q88: Cost-push inflation is depicted as a rightward Q140: A decrease in per-unit production costs will Q151: The equilibrium price level and equilibrium level
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents