Question

6. The economy is in a recession. There is a significant decrease in aggregate demand. The unemployment rate is above the natural rate of unemployment and the real GDP is below the full-employment output. Which of the following statements is correct? A. There is downward pressure on the price level, and the government may want to conduct a contractionary fiscal policy to revive the economy. B. The economy is slipping into a recession, and the government may want to conduct an expansionary fiscal policy to revive the economy. C. There is upward pressure on the price level, and the government may want to conduct a contractionary fiscal policy to revive the economy. D. The economy is overheating, and the government may want to conduct a contractionary fiscal policy to revive the economy.

          6. The economy is in a recession. There is a significant decrease in aggregate demand. The
unemployment rate is above the natural rate of unemployment and the real GDP is below the
full-employment output. Which of the following statements is correct?
A. There is downward pressure on the price level, and the government may want to
conduct a contractionary fiscal policy to revive the economy.
B. The economy is slipping into a recession, and the government may want to conduct an
expansionary fiscal policy to revive the economy.
C. There is upward pressure on the price level, and the government may want to conduct a
contractionary fiscal policy to revive the economy.
D. The economy is overheating, and the government may want to conduct a contractionary
fiscal policy to revive the economy.

Added by Jay C.

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