In the short run, expansionary fiscal policy can cause la rise in real GDP 2: O...

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In the short run, expansionary fiscal policy can cause la rise in real GDP 2: O in combination with a rise in the price level

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Expansionary fiscal policy means increase in government spending and/or, decrease in tax rates. In the short run, expansionary fiscal policy increases aggregate demand, shifting the AD curve rightward. As a result, both equilibrium price level and real GDP increase.

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