If the economy starts below full employment, an expansionary fiscal policy will shift the aggregate demand curve from _____ to _

Question

Firlakuza [10]

2 years ago

6

If the economy starts below full employment, an expansionary fiscal policy will shift the aggregate demand curve from _____ to _

____, and equilibrium will move from point _____ to

Business

1 answer:

MrRissso [65] · Answer 1 · 2023-03-01T01:09:10+03:00

The expansionary fiscal policy will shift the aggregate demand curve from AD0 to AD1 and equilibrium will move from point a to b if the economy starts below full employment.

<h3>What is the below full employment?</h3>

Its means when an the short-run real gross domestic product is lower than that same long-run potential real gross domestic product.

Hence, the economic situation will elicit a policy of expansionary fiscal which will affect the aggregate demand graph.

Therefore, the aggregate demand curve from AD0 to AD1 and equilibrium will move from point a to b if the economy starts below full employment.