From an initial long-run equilibrium,if aggregate demand grows faster than long-run and short-run aggregate supply,then Congress and the president would most likely
A)decrease the required reserve ratio.
B)decrease government spending.
C)decrease oil prices.
D)decrease tax rates.

Question

Quizplus · Accepted Answer

When aggregate demand grows faster than both long-run and short-run aggregate supply, it can lead to inflationary pressures. To counteract this, Congress and the president might opt to decrease government spending, which can help cool down the economy by reducing aggregate demand. Decreasing the required reserve ratio, decreasing oil prices, and decreasing tax rates would likely stimulate demand further, exacerbating the issue.

From an Initial Long-Run Equilibrium,if Aggregate Demand Grows Faster Than