UGC NET
Ayushi Asked a Question
August 11, 2020 5:01 pmpts 30 pts
  • UGC NET
  • Economics

53. expansionary fiscal policy wili be most cffcctive in increasing real gross domestic product when (1) the aggregate supply curve is horizontal (2) the econom

53. Expansionary fiscal policy wili be most cffcctive in increasing real gross domestic product when (1) the aggregate supply curve is horizontal (2) the economy is at or above full-employment output (3) transfcr payments are decreased, while taxes remain unchanged (4) wages and prices are very flexiblo
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  • Nidhi taparia Best Answer
    The correct answer is (1). Fiscal policy is the most successful when Aggregate Supply curve is horizontal or said to be in the Keynesian range. Because then, income rises with pric...
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