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1. A fiscal policy can be used to close a recessionary and expansionary gap.

a. True                                                b. False

Difficulty: Easy                                              Topic: Learning Outcome 11-1a

2. If markets adjusted naturally to high unemployment…

a. Aggregate supply would shift leftward in the long run to achieve equilibrium

b. Cause a rightward shift of the aggregate demand

c. The aggregate supply would shift rightward in the long run to achieve equilibrium at the economy’s potential output

d. Aggregate demand would shift leftward establishing a new equilibrium

Difficulty: Intermediate                                  Topic: Learning Outcome 11-1b

3. Closing an expansionary gap through fiscal policy….

a. increases the price level

b. decreases the price level

c. increases government spending

d. decreases net taxes

Difficulty: Intermediate                                  Topic: Learning Outcome 11-1c