Suppose the government undertakes an expansionary fiscal policy measure that raises aggregate demand, but individuals incorrectly anticipate

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Suppose the government undertakes an expansionary fiscal policy measure that raises aggregate demand, but individuals incorrectly anticipate the measure (bias upward). What will the short- and long-run changes be in the price level and Real GDP?

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Economics

ISBN: 978-1285738321

12th edition

Authors: Roger A. Arnold

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Question Posted: Feb 12, 2016 07:30 AM

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Suppose the government undertakes an expansionary fiscal policy measure that raises aggregate demand, but individuals incorrectly anticipate

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Assume that the economy is initially in long run equilibrium Since under this scenario the ...View the full answer

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