Q13. According to the Keynesian perspective, what would be the effect of running an
expansionary fiscal policy on the perfectly elastic portion of the Keynesian AS curve?
a) Increased real output
b) Inflation
c) Increased real output and inflation
d) Decreased real output and decreased deflation

Q14. The economy is currently in an inflationary gap. What would be a sensible fiscal policy to
fix this problem?
a) Decrease government spending
b) Decrease taxes
c) Lower interest rates
d) Increase government spending