When There Is Excess Aggregate Demand, The Appropriate Fiscal Policy Would Be For The Government To

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When There Is Excess Aggregate Demand, The Appropriate Fiscal Policy Would Be For The Government To

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Make budget surpluses larger. (The appropriate policy when the economy is experiencing an inflationary gap is fiscal restraint. Restrictive policy such as tax hikes or spending cuts will cause the budget to tend toward a surplus increase or deficit reduction.)

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