Author Question: Fiscal policy is likely to fail to correct stagflation in an economy because: a. it affects both ... (Read 65 times)

mcmcdaniel · **on:** Jun 30, 2018

Fiscal policy is likely to fail to correct stagflation in an economy because:
a. it affects both aggregate demand and supply, although only aggregate supply needs to be changed.
b. it affects both the aggregate demand and supply, although only aggregate demand needs to be changed.
c. it affects aggregate demand only, although aggregate supply needs to changed.
d. it affects aggregate supply only, although only aggregate demand needs to be changed.
e. it affects either aggregate demand or aggregate supply, although both need to be changed simultaneously.

Question 2

The existence of the underground economy causes gross domestic product (GDP) statistics to _____.
a. understate the true volume of economic activity
b. overstate the aggregate price level in the economy
c. overstate the standard of living
d. overstate the profit of firms
e. understate government spending in an economy