If aggregate demand increases as a result of counter-cyclical fiscal policy,prices will rise and GDP will fall.

Question

Quizplus · Accepted Answer

If aggregate demand increases as a result of counter-cyclical fiscal policy, GDP is likely to increase, not fall, as increased demand leads to increased production and economic growth. Prices may increase due to higher demand, but this does not necessarily mean a decrease in GDP.

If Aggregate Demand Increases as a Result of Counter-Cyclical Fiscal