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Expansionary and Contractionary Fiscal Policy
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Expansionary and Contractionary Fiscal Policy
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20. Fiscal Policy / Expansionary and Contractionary Fiscal Policy / Problem 3
Problem 3
How can increased government spending lead to a higher GDP in the context of expansionary fiscal policy?
A
By increasing aggregate demand and shifting the AD curve to the right.
B
By decreasing aggregate demand and shifting the AD curve to the left.
C
By decreasing aggregate demand and stabilizing price levels.
D
By maintaining current levels of aggregate demand and GDP.
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