When there is excess aggregate demand in the economy:
A. Desired fiscal restraint equals the AD excess divided by the multiplier.
B. The GDP gap is negative.
C. Full-employment output is lower than equilibrium output.
D. All of the above.
Answer:D
When there is excess aggregate demand in the economy:
A. Desired fiscal restraint equals the AD excess divided by the multiplier. B. The GDP gap is negative. C. Full-employment output is lower than equilibrium output. D. All of the above.